Keep your fingers crossed

FUND ANALYSIS/ Magnum Emerging

The debut of the fund could not have been better. The fund emerged as the best performing diversified equity fund in 2005. Unfortunately, this did not last and through 2006, the fund's performance dipped significantly leading to a dismal rank of 95 among 145 funds.

At times the portfolio looks at odds with its mandate. On one hand, the fund has been positioned as a growth-oriented fund focusing on companies that will cash in on global and domestic opportunities primarily through outsourcing and exports.

But on the other hand, the fund's absence in sectors such as energy and financial services is conspicuous. Not many would disagree that the energy sector in India is emerging.

As far as investment style goes, the fund leverages on concentrated bets; given that as mid-cap player, the top 5 holdings account for 33 per cent of the assets. The investment style also has a contrarian ring to it; the fund steadily built its exposure in the metals space between August 2006 and January 2006, when the sector was amongst the worst performers. But, the fund has been rewarded for its strategy to hold on to the sector.

The fund returned 21.38 per cent as against the category's 16.88 per cent in the June 2007 quarter, primarily on the back of its exposure to metals. Another contrarian bet is the fund's holding in the textile sector which was as much as 11.76 per cent in May 2007. The fund has a new manager, so it may be wise to wait and watch how future performance pans out.