Last year, the fund silenced all critics. Having outperformed till 2006, it turned out to be very average in 2007 and 2008. But it obviously has not lost steam.
Fund manager Jain has been aggressive with the equity allocation but ensured that investors were well rewarded. An annualised return of around 25 per cent over the past 10 years is nothing short of impressive. None of its peers have been able to match such a performance.
Jain sticks to his convictions and does not get carried away by momentum plays. When other fund managers were betting on real estate and energy, he was conspicuous in his lack of enthusiasm. In 2007, exposure to auto was around eight per cent while allocation to energy was lowered to around three per cent by December. BSE Auto delivered three per cent, while BSE Oil & Gas and BSE Power delivered 115.25 per cent and 122 per cent, respectively.
Jain has no problem moving against the herd, as reflected in his sector selection and even in the stock picks. He has not invested in Reliance Industries since April 2009, though all peers hold that stock.
Though the fund has always stayed well within its equity limit (75 per cent), the allocation to equity since mid-2006 has always been above 70 per cent. The fund manager got punished for this in 2008 but was vindicated in 2009. Though the fund follows an all-cap strategy, the portfolio is tilted towards mid and small caps. However, the portfolio is very diversified, currently at 72 stocks. On the debt side, the fund largely invests in debentures of the financial sector, with small exposure to GOI Securities and Structured Obligations.
