BIRLA SUN LIFE FRONTLINE EQUITY
In its first year, the fund failed to beat either the category average or its benchmark. For the next two years, it remained a category underperformer. It began to impress only after Mahesh Patil took over towards the end of 2005.
2006 saw the fund emerge as a top quartile performer and in 2007, it comfortably beat the category average. In the market downturn in 2008, it fell less than the category average in all the quarters. In the first quarter of 2009 also, it succeeded in curtailing its losses to 1.17 per cent while the category shed (-) 2.95 per cent.
In the past, there were ample instances of the topmost stock cornering more than 9 per cent of the portfolio as well as a number of occasions where the stocks in the portfolio hovered at around 20. Under Patil, the holdings became more diversified and the number of stocks too rose. Its portfolio is now well diversified with 56 stocks (June 2009).
The fund manager has been pretty good with his sector allocations. In 2008, as well as the first five months of 2009, it was the energy and financial services sectors that got bulk allocation. It has also been taking exposures to derivatives from May 2008.
In the recent market rally (09/03/2009-30/06/2009) too, the fund has been able to match its category, gaining 71.35 per cent.
A well diversified portfolio tilted towards large-cap stocks with decent long-term returns makes the fund a stable offering.
FRANKLIN INDIA PRIMA PLUS
Prima Plus has evolved from a brash and adventurous offering to a well diversified, large-cap oriented player with low volatility and decent returns. Though his positions in individual stocks sometimes touch almost 10 per cent, it is not much of a risk since it is a high quality, liquid portfolio. The small, and frequently churned, exposure to lower cap stocks, which on an average is 28 per cent, adds alpha to the fund.
Despite a leeway to invest up to 40 per cent in debt and 20 per cent in cash, the fund's equity allocation averaged 94 per cent in 2008. And it still managed not to fall as hard as the category average. The allocation to defensive sector (FMCG) helped the fund contain it downside.
But in the recent rally (March 9, 2009 to June 30, 2009), exposure to FMCG sector led the fund underperform its category as it delivered 63.40 per cent against its category's 71 per cent.
Granted, this fund will not deliver flashy returns. But then neither will you regret having invested here.
HDFC TOP 200
The fund has beaten the category average every single year, except in three instances. In 1999, its high exposure to FMCG and pharma went against it in the tech-dominated rally.
But despite these occasional setbacks, we continue to think highly of this offering. Its success in standing upright in a bear market, without resorting to debt or high cash levels, is a testimony to the fund manager's proficiency and skills.
Not only this, being almost fully invested helped the fund outperform the category by a wide margin of around 12 per cent as it turned in 83.20 per cent during the recent rally (March 9, 2009 to June 2009). The fund, gained from around one fourth of its portfolio being allocated to banking stocks, as BSE Bankex was among the best performing indices in this rally.
Ever since Jain took over early 2002, the fund has sported a predominantly large-cap portfolio consisting of blue chip stocks (though some of his mid-cap picks turned out to be multi baggers). Recently, there has been a more generous accommodation to mid-caps, which have been cornering around 35 per cent of the portfolio. Those who share the fund manager's conservative views and long-term approach have good reason to stay the course.
