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KP Bluechip

The virtue of diversification is easy to preach but difficult to practice. With a dedication to this golden investment rule, Kothari Pioneer Bluechip deserves being the core of any equity portfolio

The virtue of diversification is easy to preach but difficult to practice. Kothari Pioneer Bluechip, which has struck to this golden principle, reflects how far a well-diversified equity fund can take you in the long haul.

The numbers speak for themselves - an annualised return of 25.47 per cent in its over seven-year tenure has seen the fund handsomely outperform the market. The fund's initial IPO gains of 1994 had got wiped out by the time it came up for redemption as a closed-end fund. However, the fact that the fund has been able to reassert itself in its open-end avatar, with a good part of its gains coming against the odds of a bearish market, makes the returns stand out.

Resurrecting itself with a small asset base, the fund has since 1997, focussed on bluechip companies, which are market leaders. The fund invests in wealth generating companies earning more than the cost of capital and sustaining it with good management. In a selectively rising market, the fund has been overweight on technology, pharmaceutical and consumer sectors with the troika accounting for half of the portfolio and technology being a third of the holdings in 2000. The active management with diversification theme has helped the fund scale the returns chart as also stem the downside risk vis-à-vis its peers and broad markets. Not surprisingly, the fund falls in the low risk, above return grade.

While the fund may not be a consistent topper, it offers steady returns with diversification and large-cap growth orientation. Kothari Pioneer Bluechip deserves being the core of any equity portfolio