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CATEGORY WATCH: DIVERSIFIED EQUITY FUNDS
Different strategies but good offerings
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DBS CHOLA OPPORTUNITIES
If you have no qualms about a choppy ride, this nimble offering is worth a look. Originally the Chola Freedom Technology Fund, it turned into an opportunities fund in December 2003. Over the next two years, its performance was far from impressive. Then, in 2006, it began to change for the better.
In 2007, it was smart sector bets that worked in its favour. Exposure to the energy, metals and engineering sectors moved up towards the end of the year and the fund manager was rewarded handsomely for these moves. In the last quarter of 2007, the fund delivered an astounding 43.74 per cent (category average: 28.39 per cent).
But if it truly made its mark in 2007, it faltered miserably in 2008. Its exposure to financials and construction backfired. It also tended to tilt more towards mid-cap and small-cap stocks and only to-
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and exiting them completely when the sector underperforms.
A noticeable trait is the way the fund manager flees to cash when the going gets tough. Its first three years were not too impressive but from 2006 onwards it began to shine, aided by smart sector bets. Being overweight on FMCG, energy, com-
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munication and infotech (for some part) helped it fall less than the category average in 2008. Its large-cap bent and allocation to cash also helped.
Though a very tight portfolio, its large-cap tilt and readiness to flee to cash on defensive considerations helps cushion the fall. Overall, this actively managed portfolio has certainly delivered what it set out to do.
UTI OPPORTUNITIES
This fund hit a rough patch from the outset, but began to put its best foot forward in 2007. The change in fortunes can probably be credited to Harsha Upadhyaya, who took over in March that year.
From averaging 26 stocks in 2006, making the fund broad-based was one of Upadhyaya's initial changes. Though at one time it touched 46 stocks (April 2008), over the past nine months it has averaged at around 38, while the top five stocks average a concentration of around 24 per cent.
In 2008, its fall was not as harsh when compared to its peers.
Although stocks like Axis Bank, BHEL, ITC and Reliance Industries (RIL) have featured for considerable lengths of time in the fund's portfolio, it is seen taking short-term opportunistic bets in some stocks as well.
But it does book profits intermittently. RIL being a case in point, when its holdings since April 2006 were completely offloaded by September 2007, only to reappear the next month.
Although the fund may not deliver as much as its peers in the rising markets, it does guard against the downside.
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wards the end of the year did it begin to up its large-cap exposure.
But this variable performance is exactly the fund's character. When the market rallies, it's on top of it. When it falls, the fund tumbles. In its best year (ended December 12, 2007) it delivered 93.82 per cent! In its worst (ended January 13, 2009), it fell by 63.17 per cent. More recently, its best month (ended June 10,2009) impressed with a return of 41.12 per cent. Its worst (ended October 24, 2008) was a return of minus 42.98 per cent.
But its volatility in returns does not mean its portfolio is inherently very risky. It's a fairly diversified offering and a nimble one at that. With a very small asset base, this fund finds its strength in its flexibility.
SUNDARAM BNP PARIBAS SELECT FOCUS
True to its objective, it's a focused and ag-gressive offering. It anchors itself in the sectors or themes it believes to be most promising and then bets on a few stocks.
One should not be surprised to find its entire investment universe comprises of just 49 stocks since inception. But that has not prevented active churning. Around 60 per cent of its stocks have been held for five months or less. Of the remaining 40 per cent, RIL, SBI and L&T have been its most favoured.
The suppleness is even seen in sector allocations. The fund manager doesn't hesitate in investing aggressively in the top performing sectors
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