A volatile offering

FUND PICK: Alliance New Millennium Fund

Background: Alliance New Millennium Fund was launched in January 2000. It has an entry load of 2.25 per cent up to an investment of Rs 2 crore and no exit load.

The minimum investment should be Rs 5,000 with subsequent investments in multiples of Rs 1,000. The fund offers growth and dividend options.

Performance: After staying in the bottom half of the category for a long time, the fund has gained some ground and come to the middle of the category in the past 18 months.

It managed to do well on the back of a better performance by mid-cap stocks during the period.

The fund's three-year returns, as on August 6, 2004, stood at 21.98 per cent against the category average of 20.17 per cent. Its one-year returns were at 64.51 per cent while the category average was 65.42 per cent.

In 2004, so far, the fund has lost 6.41 per cent against the category's decline of 4.63 per cent.

Portfolio: The fund takes concentrated bets in a few tech stocks. In 2003, five stocks have accounted for an average 78 per cent of its portfolio.

This was the main reason for the fund's superlative performance last year - up 67 per cent against the category average of 54 per cent.

Share prices of the fund's top holdings - Bharti Televentures and e-Serve International - zoomed last year, helping it post solid returns.

The fund has continued with both the stocks in 2004 as well. But the scrips have not been doing that well this year; hence the lower returns.

The fund has a penchant for mid-caps with around two-third of its portfolio comprises mid- and small-cap stocks. These include e-Serve International, MphasiS BFL, Hinduja TMT and Geodesic Information Systems.

Except for MphasiS, all other stocks have made smart gains, boosting the fund's performance. Mid-caps are inherently volatile; so the fund gets affected. It does have a few large-caps such as Bharti, Infosys and Satyam, some of which go in and out of the fund. 
 

Top holdings
As on July 30, 2004	Value (Cr)	Net Assets (%)
E-Serve International	28.65	22.12
MphasiS BFL	24.54	18.95
Bharti Tele-Ventures	20.23	15.62
Hinduja TMT	13.84	10.69
Infosys	13.64	10.53
Satyam	8.48	6.54
Geodesic Information Sys.	8.04	6.21
HCL Technologies	4.52	3.49
ETC Networks	3.33	2.57
Pritish Nandy Comm.	3.09	2.38
UTV Software Comm.	0.24	0.19
NDTV	0.18	0.14
Mediline Eqmt. & Comm. Sys.	0.12	0.10

Outlook: Alliance New Millennium remains volatile due to its mid-cap bias. Investors who can digest the extra risk for higher returns will like it.

- Value Research