It started off as a 'wealth protector' in October 2000 by investing only in debt. By mid-2003, exposure to equities began to increase substantially. Though this move coincided with the market rally, the fund's performance was nothing spectacular. From 2002 to 2004, it underperformed the category average.
It's only in the last two years that the fund has beaten the category average. But in the bargain, it lost the 'wealth protector' tag with its aggressive play.
Since July 2006, the fund has consistently been increasing its equity exposure and its exposure to mid- and small-caps has averaged at 38 per cent. Consider this. In November, its equity allocation was 15.14 per cent with 42.81 per cent in mid- and small-caps. In December, the equity allocation rose (17.20 per cent) but mid- and small-cap allocation dropped (36.69 per cent). In January, the equity allocation dipped (15.08 per cent) but the mid- and small-cap allocation rose (50.55 per cent).
On the debt side, the fund has tilted towards a more conservative approach in the quality of paper. The average credit rating stayed at AAA all through last year. Since April last year, G-Secs have consistently been a part of the portfolio. Where the risk does lie is in the average years-to-maturity of the paper. In August 2006 it was 1.75 years and in January 2007 it was high at 4.11 years. Of course, this will hold the fund in good stead if interest rates start dipping from now on.
Its (1-year, 2-year, 3-year and 5-year) returns are all above the category average. But the trade-off is a higher risk. When the markets crashed in May last year, this fund was badly hit and its worst monthly performance (- 5.14 per cent) is traced to the month May 12 - June 13, 2006.