We like this fund for its solid long-term record and skilled management. With a five-year annualised return of 27 per cent, it is the best performer in its category (February 28, 2010).
In 2006 and 2007, investors fretted at the average performances. In 2006, it was the high exposure to defensives that pulled it down. In 2007, energy was offloaded even when the going was good, while exposure to financials did not impact as much as metals and construction, where the funds exposure was low.
In 2008, the funds success in standing upright in a bear market, without resorting to debt or high cash levels, was a testimony to Jains skill, who restricted the fall to just 45 per cent, around 11 per cent less than BSE 200 and eight per cent lower than the category average.
Finally in 2009, Jain silenced critics by beating the category average by a margin of 14 per cent. Low cash levels, being overweight in autos and banking and underweight in power utilities and energy (reduced exposure significantly to RIL, which underperformed the broader market) helped.
The fund manager even has the liberty to in unlisted companies that would qualify to be in the top 200 by market capitalisation on the BSE.
Investors can be sure of a good quality portfolio and a fund manager who sticks by his convictions, irrespective of whoever else is playing the momentum game." "We invest in good quality businesses, keep away from richly valued investments to the extent feasible and remain diversified," says Jain.
