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Sunday, Jun 23, 2002

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Pioneer ITI FMCG: Pare exposures

THE absolute performance of the Pioneer ITI FMCG Fund in the three-year period since launch appears unimpressive, with fund generating total returns of around 9 per cent. But this is largely because the fund was launched in bull market conditions when the valuation levels for FMCG stocks were high.

The fund has outperformed the BSE FMCG Index since its launch, generating holding period returns of around 9 per cent, against a negative 30 per cent on the BSE FMCG Index. However, given the sluggish business prospects for FMCG stocks at this juncture and their relatively high valuation levels, investors can consider paring exposures to the sector.

As with all sectoral funds, timing of entry and exit has proved a crucial determinant of returns from the fund. The fund is suitable to active investors.

The fund follows a less active management style than the diversified growth funds of Pioneer ITI. The portfolio turnover has traditionally been at lower levels than for the diversified growth funds. As a result, few of the top holdings in the portfolio undergo changes on a monthly basis. The following changes were made to the portfolio between April 30 and May 31:

Stocks added: The fund added just one new stock to the portfolio — Zee Telefilms. The stock, initially a part of the portfolio, was discarded during the tech stock meltdown of 1999.

Stocks sold: All holdings in McDowell were liquidated.

Holdings enhanced: Additional shares were acquired in Nestle India.

Holdings pared: Exposures were pared in ITC, Smithkline Consumer, Marico, Bata and Tata Tea.

Fund facts: The Pioneer ITI FMCG Fund was launched in March 1999. The fund is relatively small sized at Rs 21 crore. It is managed by Mr K. N. Sivasubramaniam. It levies an entry load of 2 per cent. The current NAV is Rs 10.94 per unit. The fund has not declared any dividend since launch.

Aarati Krishnan

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