The funds mandate demands an investment of at least 65 per cent of the portfolio in equity shares that have a high dividend yield at the time of investment. A look at the record makes one wonder whether the fund manager follows this principle diligently. But Swati Kulkarni claims to have never deviated from the mandate.
The fund is best suited to those who want decent returns with good downside protection. Its impressive performance in 2007 (71 per cent) put it ahead of the Sensex (47 per cent) and multi-cap category (60 per cent). Its fall in 2008 was less than that of the Sensex, as well as the category averages. But the fund faltered in 2009.
Kulkarni began to seriously up the equity allocation only from June 2009. However, what has always worked for this fund is smart bottom-up stock picking and sector allocation. By doing that, Kulkarni managed to marginally outperform the Sensex and the other two categories in 2009 as well. Her overweight calls in IT, automobiles and fertilisers helped.
Besides scouting for companies with sustainable cash flows, Kulkarni also looks at capital appreciation potential as the next filter. Using a multi-cap strategy, she has put to rest the notion that dividend yield funds can only impress during market downturns. Simply put,the fund has navigated through good and bad times, to emerge as an impressive performer.