The fund aims to generate appreciation by investing mostly in mid-cap stocks. The risk of holding such stocks is reduced by maintaining a well-diversified portfolio. While the portfolio will primarily focus on a buy-and hold strategy at most times, it will balance the same with a rational approach to selling when the valuations become too demanding even in the face of reasonable growth prospects in the long run. The fund may also seek investment opportunity in ADR/GDR/foreign equity and debt securities up to a maximum 25 per cent of net assets. The fund's mandate is to invest at least 70 per cent in mid-cap stocks and five per cent in small-cap stocks.
Launched in June 2007, it made its mark the very next year. It contained the 2008 downside a lot better than its peers because of its then close-ended status. That year, the fund also outperformed its benchmark, the CNX Midcap. With no redemption pressure, it retained 92 per cent equity allocation through 2008, before the market began to turn around in 2009. In 2010, the fund turned open-ended.
Banking, capital goods, pharmaceuticals and auto and auto ancillaries are the top sectors. The portfolio comprises around 50 stocks. On an average, 60 per cent of the portfolio is in mid-caps and 30 per cent in small-caps.
It increased its exposure to value stocks in 2010. That helped it turn in a good performance last year and also checked volatility in returns. If one looks at the long-term return, as well as the annual returns of 2009 and 2010, this one has emerged a winner.
