Unit Scheme '95: A conservative fund

FUND PICK

Background: Unit Scheme '95 (US-95) was launched in March 1995. It has an entry load of 1.75 per cent and there is no exit load. The minimum investment is Rs 1,000. The fund offers a dividend option, too.

Performance: US-95 is a conservative fund, delivering safe and steady returns for investors. It is a good vehicle for investors who want their investments to be placed in a safe haven with reasonable returns.

Though the fund's one-year return at 37.93 per cent is slightly lower than the category average of 42.98 per cent as on June 4, 2004, its long-term return makes up for the shortfall.

US-95 has provided its investors with a five-year return of 21.21 per cent compared to the category's 14.36 per cent.

Portfolio: The fund has managed to stay firm and deliver returns even when the markets have gone haywire. For example, in 2000, it returned a whopping 26 per cent compared to the category average of 13 per cent negative return.

Similarly in 2001, the fund's returns, though negative, have coincided with that of the category. It had a limited exposure to top-rung tech companies and a marginal exposure to mid-cap stocks.

While the fund protected its downside, the gains as well as risks were also trimmed down. It also shifted predominantly into debt, thereby escaping the blood-bath.

As equity markets stabilised, US-95 became an equity-oriented fund. The fund benefited from its quality mid-cap holdings including Wyeth Labs and Pfizer. Of late, it has shifted its focus from large-caps to mid-caps. This has been a major shift keeping in view its conservative investment approach.

In debt the fund prefers corporate bonds with a judicious mixture of AA and AAA bonds. Government securities have rarely grabbed a 10 per cent share even in the rising market of 2003. The fund improved its credit quality with corporate bonds holding the major part of debt portfolio.

Outlook: US-95 is a good investment for patient and risk-averse investors.