The fund has been able to justify its heavy concentration in small and mid cap stocks with good returns
01-Dec-2006 •Value Research
A high-return, high-risk option, it may not go down well with investors who are looking for stability over flashy returns. Its concentration in small- and mid-cap stocks is a testimony to this fact. Mid and small caps occupy almost equal space in its portfolio, at 44.91 and 44.64 per cent, respectively. Large cap companies have a small presence at 4.66 per cent. The previous month - September- large caps had a marginal presence at 1.17 per cent while the concentration of mid caps was over 50 per cent.
The fund is no doubt aggressive but it has been able to justify its strategy through good returns. The fund is not only aggressive in selecting stocks but also churns its portfolio very vociferously. The fund manager loves to try out stocks but the buy-and-hold strategy does not seem to be his priority. The fund's quarterly returns for September stood at 23 per cent, much more than category average of 15 per cent. However it paid the price for being too aggressive. After the May crash, the fund had lost heavily. In the June quarter, it had lost 15.75 per cent, slightly more than the category's loss of 15.35 per cent.
However, it recovered in the September quarter and generated 23.35 per cent during the period. With a portfolio of around 50 stocks, the top five holdings account for almost a fourth of its assets. Healthcare sector remains the top holding of the fund followed by textiles, diversified and FMCG.
The technology sector occupies a paltry 4 per cent allocation. In October, the fund increased its allocation to the basic/engineering sector by 56 per cent. HEG remains the top holding of the fund comprising 5.06 per cent of the portfolio, followed by Cadilla (5.04 per cent), Kesoram Industries (4.99 per cent) and ITC (4.51 per cent).