WE LIKE this fund for its solid long-term record and skilled management. Its historical performance has been impressive.
But its performance in recent years has kept investors worried.
In 2006, it was a very average performer due to high exposure to defensives.
In 2007, its category underperformance was a result of wrong sector moves. Energy was offloaded even when the going was good.
"The portfolio moves were, in my opinion, consistent with our investment approach. The criteria that go into selecting stocks/sectors are quality, our understanding, growth prospects, valuation of businesses and the composition of the benchmark — BSE 200," says fund manager Prashant Jain.
So why do we continue to think highly of this offering? Ever since Jain took over in early 2002, the fund shed less than the category average in all declining quarters, barring June 2004 when the fall was in line with the average.
The fund's success in standing upright in a bear market, such as 2008, without resorting to debt or high cash levels, is testimony to the manager's skill.
Here it was the large-cap bias and exposure to FMCG and healthcare that restricted the fall to 45 per cent (category average: -53%).
In the recent rally (March 9, 2009-May 31, 2010), it gained a striking 111 per cent (category average: 82%).
Since Jain took over, the fund has a large-cap orientation and greater diversification.
Earlier, a single sector accounted for nearly 40 per cent and a single stock 17 per cent, but in the past three years, no sector and stock has crossed the 27 per cent or 10 per cent threshold, respectively.
The number of stocks also rose to touch a high of 65 (April 2009). Those comfortable with a well-diversified, large-cap oriented portfolio that contains the downside should consider this fund.
