This fund identifies stocks whose prices are low, relative to historic levels, book values (BV), earnings and cash flow potential. It picks stocks with high potential, at a discount to their inherent value. Selection is focused on the merits of the stock, unperturbed by the market trend. Investors need conviction and investment discipline to realise these gains. It invests in well managed and fundamentally strong companies.
It isn't surprising to see the fund move in and out of sectors wherever it sees value or lack of it. A mix of investing strategies have been employed in this fund- contra, dividend yield, low valuations and special situations.
Financial services, metals and healthcare are the top three sectors, but the stock choices aren't typical. The top ten stocks include some uncommon and offbeat companies as well. The fund focuses on mid-caps (35 per cent), small-caps (35 per cent) and large-caps (30 per cent). The equity exposure is always above 90 per cent.
The long-term track record is impressive and it has fallen less than the category average in the current market upheaval.
Though it trounced the competition in 2009 and was a top-quartile performer in 2010, its value-based approach can be a letdown during bull runs. Since it tilts towards a mid- and small-cap portfolio, its downside protection is moderate. Its market cap tilt and value-based approach make it mandatory to stay invested for the long term.
