Diversity brings profits

Granted, the fund’s impressive performance is attributed to its investment theme but the fund manager does deserve a mention too. His ability to spot sector trends has made this fund stand out amongst its infrastructure peers.
Not only has it delivered returns higher than the average peer, but has also managed to defend itself better when the market tanked. The superior performance can be attributed to the fund manager’s astute sector calls. For instance, before the market tanked in May 2006, the fund manager had cut back his exposure to financial services. A profitable move because the sector was amongst the biggest losers in the bear phase that ensued. By February 2007 the fund
manager re-entered the sector, timing the entry rather well, because through the June 2007 quarter (April-June) this sector delivered phenomenal returns.
To capitalise on the rally in construction and basic engineering, he increased exposure to these sectors till they accounted for 42 per cent of the fund’s portfolio during 2006. The very next year, while maintaining his exposure to basic engineering, he increased it to metals, financial services and energy.
The allocation to construction has been drastically reduced and it currently stands at around 7 per cent as compared to 30 per cent in November 2006. The cash holding has been consistently rising from February 2008, when it was almost 13 per cent, to 27.17 per cent.
The portfolio of this large-cap growth offering can well be characterised as diverse. On an average, the fund holds around 60 stocks in its portfolio and rarely does any stock account for more than 4 per cent of the entire portfolio.
The top five holdings of the fund account for just 16 per cent of the fund’s portfolio.