Technology is not meant for pigeon hearts. But if you are willing to brave the rough sea, it is better to stick to a quality portfolio. Kothari Pioneer Infotech (KPIT) could be your gateway to Indian technology stocks.
Still hosting a 50 percent total return since launch, the fund has a stellar track record congruous with portfolio quality. Agreed, an encore may or may not be possible, but the short-term gyrations not withstanding, the sector still holds good long-term potential. Even the skeptic would agree that events in the last quarter point to the slowdown and certainly not the death knell.
A good part of the sizzling returns from KPIT has been because its launch was well timed with the fund manager, Sukumar making the most of it. His stock picking strategy is well laid out - hold a mix of a quality portfolio of blue chip and small company stocks. The fund manager also scouts for companies, which can survive through worst of market phases for his core portfolio. Even in the peak technology heat, the fund stayed away from the top speculative and held a concentrated bundle of quality stocks. The quality focus has been sustained with a phenomenal growth of corpus. The blue chip stocks provide steady returns, while the marginal exposure to the small companies rake in extra returns. The fund also sought an average 18 percentage allocation to cash with the markets moving range bound since early 2000.
That said, sectoral funds with their dedicated investments are riskier among the equity lot - the 1-year loss of 43% bears this out. The fall should not deter you if you are still convinced of the technology story. However, sectoral funds are meant to supplement a well-diversified portfolio. By choosing a systematic investment plan, you can make the volatility work in your favour