What you find here is a huge and diversified portfolio, with a distinct largecap flavour. Naturally, such a portfolio cannot be expected to deliver astounding returns, but will give investors a good night's rest and add to their bank balance.
This bent is the result of the fund's size. In a big fund, the top exposures, by default, have to be in larger stocks. Exposure to mid- and small-caps would have to be done wisely. Hence, the top holdings are large-caps and the tail end of the portfolio is allocated to small-caps. While the fund doesn't churn the portfolio often, it shifts positions amongst the top 10 stocks.
After an impressive 2006, its returns have been in-line with the category average (slight underperformance in 2009). That was simply because funds with smaller-cap stocks rallied on ahead.
In 2007, this fund increased its exposure to metals, even when the sector was languishing, which paid off as it later gained tremendous momentum. Surprisingly, it got out of construction pretty early in 2007. Had it stayed on in this sector, the returns would have been astounding. In 2008, the fund dropped financials between January and May to increase it later, a move that paid off.
Though its exposure to energy and metals is now more or less in line with the category average, it is pretty bullish on financials. Reasonable valuations, strong growth in corporate banking, and credit growth as corporate capex improves are the reasons to pick this sector. The fund manager looks for strong growth companies, but does so cautiously.
