This scheme invests at least 65 per cent in mid- and small-caps. The balance can be in other equities, including American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). Small- and mid-caps are defined as equity stock with market capitalisation equal to or lower than that of the stock with largest market capitalisation in the CNX Midcap 200 Index.
Its return of 81 per cent (category average: 64 per cent) in 2007 and 120.44 per cent (category average: 98 per cent) in 2009, got noticed. Its savvy sector bets helped the fund.
The fund shirks debt and prefers cash. Interestingly, the fund delivered impressive returns during the latest rally (March 9-December 31, 2009), though cash exposure averaged at around 14 per cent between February and April. Only from May, after the election, was the fund more or less fully invested. It rode on all the economically sensitive sectors like financials, industrials, consumer discretionary and commodities, which paid off well.
With this offering, you can be sure of ample diversification amongst sectors, as well as stocks. Over the past year, the number of stocks has averaged 53, a considerable change from its earlier days, when it touched 96.
While around 40 per cent of its investment universe comprises of stocks that have been held in the portfolio for less than six months, many have been held for considerable lengths of time. Its worth noting that in most stocks, the fund offloads positions completely before buying afresh.
Despite riding the bull run well, it did not give a headline grabbing return in 2006 or 2008, but was a category beater. Its 3-year trailing return of 19 per cent (category average: 8 per cent) as of December 31, 2009, speaks for itself.
