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, too, it succeeded in curtailing its losses to 1.17 per cent, while the category shed (-) 2.95 per cent.
| Size (Rs Cr) | 1,449.07 |
| Top Holdings Company | Assets (%) |
| Infosys Technologies | 4.10 |
| Reliance Industries | 3.80 |
| Tata Consultancy Services | 3.49 |
| ITC | 3.17 |
| ONGC | 3.10 |
When Patil took over, he exited a number of stocks and a number of new additions were made to the portfolio, including some debutants. But the most apparent change brought about was the level of diversification. 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 per cent. Under him, the holdings became more diversified and the number of stocks rose, too. Its portfolio is now well diversified, with 58 stocks (November 2009).
In the recent market rally (March 9 to November 30), too, the fund has been able to outperform the category, gaining 111.14 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.
In its heady days, the portfolio could hold as few as 19 stocks to over 100. The dotcom bubble burst of 2000 was the turning point. The fund manager now mainly sticks to large-caps. 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.
| Size (Rs Cr) | 1,758.77 |
| Top Holdings Company | Assets (%) |
| Infosys Technologies | 5.93 |
| HDFC Bank | 5.72 |
| Cairn India | 3.90 |
| Bharti Airtel | 3.70 |
| Nestle India | 3.44 |
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 the defensive sector (FMCG) helped the fund contain its downside.
But, in the recent rally (March 9 to November 30), exposure to the FMCG sector led the fund to underperform its category, as it delivered 95.90 per cent against its category's 108 per cent.
The fund manager does not buy into fads easily and follows his own convictions. For instance, in 2008, there was a substantial increase to FMCG and telecom, while the exposure to computer software fluctuated from 3 per cent (November 2007) to 14.56 per cent (May 2008) and down to 4.95 per cent (March 2009).
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. In 2000, it went overweight on technology and got punished for it.
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.
| Size (Rs Cr) | 5,781.60 |
| Top Holdings Company |
Assets (%) |
Not only this, being almost fully invested helped the fund outperform the category by a wide margin of around 16 per cent, as it turned in 124.48 per cent during the recent rally (March 9 to November 30). The fund gained from around a fourth of its portfolio being allocated to banking stocks, as BSE Bankex was among the best performing indices in this rally. Recently, there has been a more generous accommodation to mid-caps, which have been cornering around 35 per cent of the portfolio.
And the top holding, which at one time had brazenly high allocations, is now at a more subdued level, with around 60 stocks in its kitty. Though the fund stays well diversified on the sector level, the fund manager has largely parked half the assets in three sectors.
Those who share the fund manager's conservative views and long-term approach have good reason to stay the course.
