The fund looks for small and medium sized businesses with good long-term potential and cheap valuations. Its equity component would be in the range of 65-100 per cent.
This fund has underperformed the category average only in three quarters. In 2007, it trounced the competition, with 110 per cent return (category average: 64 per cent). In the subsequent bear phase, it shed 54 per cent (category average: minus 62 per cent). Its 3year trailing returns of 25.85 per cent (31 December, 2009) makes it the best performer among its peers.
The fund boldly rides on sector bets and does not shirk from taking contrarian stands; its bias is towards services since inception and restrains from going heavy on energy. In 2007, the fund did not get into metals. That year, the BSE Metal Index returned 121.47 per cent and the fund returned 46 per cent more than the category average.
This scheme attempts to capture shifts in the business environment with regard to new business opportunities, technologies and trends, with a focus on small companies. The fund maintains atight portfolio across 29 stocks (1-year average) and their allocation does not cross seven per cent, barring Shree Renuka Sugars and Exide Industries.
This fund tends to maintain a relatively higher debt/cash allocation. This is a good stance, since companies in this segment are not very liquid and it has to ensure ample liquidity for redemptions, so as not to touch the entire portfolio.
