The Hindu Business Line : Reliance, SBI, ONGC top Fidelity Fund

FIDELITY Equity Fund, which unveiled its portfolio for the first time on Friday, has relied heavily on the banking, petroleum and software sectors, which together constitute about 30 per cent of its assets. Reliance, SBI, ONGC, Bharti and Zee are its top five holdings.

Fidelity, which allotted units on May 16, has returned 9.44 per cent at the end of the second quarter, compared to the 6.76 per cent provided by its benchmark, the BSE-200, during this period.

"A key overweight position in a diversified financial company added to positive fund performance," the MF has pointed out, adding "underweight exposure to selected stocks in the materials sector added value as these companies suffered from a softer pricing environment". Consumer goods, auto, pharma and telecom are some of the bigger allocations.

The fund (NAV: Rs 12.21 on August 4), which had announced it would rarely allocate over 4 per cent in a single stock, has invested in a number of sectors that account for less than one per cent. These include chemicals (0.67 per cent), printing (0.52 per cent), fertilisers (0.15 per cent), transport (0.13 per cent) and travel (0.03 per cent).

The various large allocations have been explained:

Banks: In the longer term, increased momentum in domestic capital expenditure growth could boost earnings for the banking sector. The fund has an overweight position in SBI. The latter, with its strong retail franchise, is said to be gaining from robust loan growth in both corporate and retail segments.

Consumer-related sectors: The fund has "a large overweight position" in media, leisure, auto/auto and consumer staples. Demographic changes and rising income levels are leading to higher domestic consumption, it is felt.

Industrials: Companies look set to benefit from more infrastructure spending and an upturn in the capital expenditure cycle. These relate to engineering and construction companies and materials manufacturers.

Energy: The fund has significant exposure to energy and utility outfits. Reliance, ONGC and GAIL lead its sectoral allocations. Despite short-term volatility, it is bullish about longer-term gas transmission volumes.

The fund manager, incidentally, follows a `go anywhere' strategy and is free to hold companies regardless of size or industry.

The idea is to follow a bottom-up approach and diversify its holdings.

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