Making the small fries count in a big way

FUND ANALYSIS: Pru ICICI Emerging Star

A fabulous 56.72 per cent (as on February 20, 2007) return since its launch in October 2004, that too on the back of mid- and smal-cap holdings, is what caught our attention.

Given the stellar performance of large caps in 2006, the fund began building its position in large caps from nil to 7.56 per cent of assets under management during the third quarter ending December 31, 2006.

True to the style of a mid- and small-cap fund, Prudential ICICI Emerging Star holds a large number of stocks in its portfolio.

The fund, however, has shed a lot of the flab since May 2006, when the fund consisted of 81 stocks. By the end of January 2007, the fund was holding 58 stocks in its portfolio.

Technology, metals & metal products and construction were the main sectors in which the fund invested in 2006. As of January 31, 2007, the combined exposure to the three sectors was an impressive 43.3 per cent of the assets under management.

The fund bets big in technology space with holdings peaking to 29.68 per cent in June 2005. As of January 31, 2007, 22.7 per cent of the fund's assets were deployed here.

Although the portfolio is churned quite frequently, there are some stocks that the fund manager has held on to with conviction and has been duly rewarded. The most prominent among them are Subex Azure and Sintex Industries (both has been held since November 2004).

While the fund has outperformed the category average returns, it has not been very successful in protecting the downside.