Background: True to its name, Zurich India Prudence has always followed a disciplined strategy. This fund was launched in January 1994, and is one of the first schemes from Zurich India Mutual Fund. It carries an entry load of 2 per cent but the exit is at NAV.
Performance: For its prudence, this 4-star balanced fund has that extra punch. It has a credible long-term record of posting reasonable returns with consistency. Its annual rankings -- always in the top-quartile of the category -- bear testimony to this.
Moreover, this year, when there has been a stock-specific rally, it tops the category by delivering a one-year return of 28.98 per cent. The fund owes its consistency to the diligence with which it has kept its equity portfolio diversified and its high debt quality.
Even in the new economy boom it stayed diversified and its technology allocation never exceeded 21 per centof the toal corpus. In spite of this relatively low technology allocation, it raked in a return of 105 percent in 1999, widely surpassing the category average of 62 per cent.
Portfolio: The fund has maintained a higher equity focus than its peers but has kept the allocation in stock and debt close to 60:40. It has actively managed its sector allocation by reflecting preferences without going overboard on any one.
For instance, the top sector was consumer-non durables in 1999, but in 2000 it was technology and in 2001 it was automobiles. Currently it is concentrated on energy (read Petroleum PSUs).
The fund has generally remained diversified, even during the tech boom. It has always followed an active management style, except for a few stocks like BPCL, Concor and Bharat Forge, where it continues to maintain its positions.
Besides, the portfolio has largely comprised large-cap holdings, which has helped insulate it from volatility. The recent divestment derailing has, however, forced it to post a loss of 6.81 per cent in September, which is almost twice the category averages.
On the debt front where it has 40 per cent allocation, the approach has been almost passive, even during the rally in 2001. It has largely maintained high credit quality by staying in AAA and equivalent papers, and at times has held sizeable amounts in cash. After staying away from gilts for long, in the recent three months it has become bullish about a interest rate cut and has established a strong position.
Outlook: This fund takes risk without going overboard. Combined with consistent performance, it is a solid choice for investors seeking growth with stability in a single fund.
