Since March 2006, the second-largest technology fund has done well in the July-September and October-December quarters - when the markets were buoyant - generating returns of 16.75 per cent and 27.34 per cent, respectively. But the fund gave a negative return of 10.44 per cent in the quarter ended June 2006 as against a 7.12 per cent loss in the BSE IT index, emphasizing its inaptness to protect investor wealth in a falling market. In fact, between May 10 and June 30, the fund slipped a massive 23.60 per cent, the most by any technology fund. Again, in February 2007, when the markets turned weak, it figured on top of the losers' list -the fund lost 10.7 per cent during the month ended March 9.
The fund, which started as a large-cap oriented fund in April 2000, has of late developed a strong liking for mid- & small-cap companies. This has resulted in the fund becoming aggressive and extremely volatile with a standard deviation of 7.20, the highest in the category. But its bets on mid- and small-cap companies have rewarded the investors handsomely. In 2006, the fund's performance was the best - with a return of 51.6 per cent - in the category of technology funds (46.29 per cent). With a massive exposure to mid- and small-cap stocks (an average of almost 74 per cent between March 2006 and February 2007) the fund maintains a portfolio of around 30 stocks. It limits its exposure to individual stocks at around 10 per cent with top five holdings accounting for an average 42.58 per cent (March 2006-February 2007) of the portfolio.
Investors ready to brave instability and stay invested for the long-term may see handsome returns in the future.
This article was originally published on April 18, 2007.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
