Type: Equity Diversified
Fund Manager: Paras Adenwalla
Launch Date: 09-Dec-2005
ING Vysya L.I.O.N (large cap, intermediate cap, opportunities, new offer) Fund seeks to provide medium to long term capital appreciation by investing in stocks across the entire market capitalisation range. ING Vysya L.I.O.N fund predominantly moves across various market caps to optimize returns and currently 53% of the total corpus is into large cap stocks.
The investment mandate of the scheme states that it will invest 75-10 per cent of its assets in equities and out of which at least 20% will be invested in large cap stocks, while 0-70% will be invested in midcap scrips, and 0-40% will be in small caps.
Existing mutual fund schemes in the Indian markets, which have a flexi-cap investment strategy, have had a mixed result in the last one year in terms of performance. Some of the comparable schemes like SBI Magnum Multicap and Franklin India Flexi Cap have generated good returns, but the rest of the category has been a laggard, including ING Vysya L.I.O.N fund. Broad based index of BSE 100, appreciated by around 44% in the said period, whereas Sensex generated a return of 49.84 per cent. The last one-year has seen lot of volatility and there has been a paradigm shift in the way investments have moved around the different market cap range.
Since most of the schemes based on the multi-cap investment theme, are in their first year of operation, the category as a whole is pretty nascent, and the going had been pretty tough for the scheme. Early in 2006, when the markets were on a Bull Run, stocks from across the market capitalisation were witnessing appreciation, but the ensuing correction mid-year, hit the midcap and smallcap segment of the markets the most, and the attention shifted to large cap stocks. But, in the last couple of months, we have again seen inflows in the midcap space. In view of this volatility, schemes which have been able to identify the trends earlier than the markets have been able to generate returns for its investors.
ING Vysya L.I.O.N Fund was heavily invested into the midcap space, compared to its peers, immediately after its launch in Dec 05. Although, the scheme slowly started shifting its assets into large cap stocks, but it still had a higher midcap allocation, compared to it peers, before the market meltdown, which impacted the scheme's performance.
The use of cash component has also not been very actively utilised by the scheme, as it has sought to remain invested in equities at all times, and average allocation in the last one-year has around 94%. Although, it is generally good to remain fully invested in the markets, in times of uncertainty, a quick reallocation is also imperative and the scheme has been found wanting in that respect. Franklin India Flexi Cap, which generally allocates 5-6% in cash and equivalent instruments, had increased the allocation to around 13% in May-June 06 periods. Similarly, SBI Magnum Multi Cap had hiked its cash exposure to 11% in the same period.
In terms of month-on-month performance, the scheme was able to restrict its losses in the falling market quite well, taking into the account the higher midcap exposure, and it has been less volatile compared to its peers in the interim period.
The scheme currently manages a corpus of Rs 104.64 crores, and has seen erosion in the fund size. The scheme is adequately diversified across 36 stocks and Reliance Industries is the top holding. Since the scheme is still in its early days, and has been an average performer, existing investors can look to hold on to their positions for a while longer.
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