The fund's past performance is nothing to write home about. In the years 2004 and 2005, it even underperformed the category average. Year 2006 saw a change in the fund's performance when it delivered a top quartile return. As a result, its 1-year returns of almost 42 per cent are ahead of the category average of 31.37 per cent but its 3-year returns match the category average.
Its performance led to investors pulling out of the fund in 2005. But a better performance in 2006 saw the assets under management pick up to the current Rs 306 crore.
Though its mandate is to invest in the 100 largest corporations by market capitalisation, there have been numerous months where mid-caps have occupied more than 10 per cent of the portfolio. Soon after launch early 2003, mid-caps were more than 20 per cent of the portfolio.At times, the fund manager does not hesitate to take a substantial cash position.
The portfolio lacks concentration. In the past few months it has averaged around 40-43 stocks with no single stock going more than 7 per cent of the portfolio. Neither does it take concentrated sector bets. In the past few months, the top sector, Technology has hovered around 26 per cent of the portfolio. The next sector, diversified, follows with an allocation of around 13 per cent.
The fund does not jump in and out of stocks but holds on to them. TCS and Infosys are examples where the fund has invested in them since August 2004 and July 2003, respectively and held them till date. In others, it has held exited and re-entered. A case in point in Sterlite Industries (India) Ltd which it bought in November 2003 and hold on till date but did exit in April last year and re-entered later.
This fund can be targeted at those looking for a risk-averse market ride and willing to compromise on the returns.