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Suresh Krishnamurthy

INVESTORS in Taurus Bonanza Exclusive Growth can use the NAV run-up over the last year to reduce their exposures to the fund. The performance of the fund in 2002 improved, pushing the NAV above the Rs 10 level now. The fund was taken over by Taurus Mutual Fund in April 2002 from BOI Mutual Fund.

Still, investors can reduce their exposures because of the following reasons. The performance of the fund, even in 2002, has been sketchy. The first half of 2002, which was impressive, was largely due to investments in mid-cap stocks.

However, the strategy can be considered as relatively risky.

In addition, the performance of the fund in the second half of 2002 has been unimpressive when compared to peers. In this context, investors can consider reducing their exposures to the fund.

Suitability: The objective of the fund is to generate capital appreciation by investing primarily in stocks along with a mix of debt and cash. This suggests that the fund manager may attempt to time the market by moving alternatively between cash and equities based on the outlook for stocks. Such an approach may insulate the fund from a bear market. However, it may not help it take advantage of any rising trend in the market. Over the long term, a strategy of moving between cash and equity may be counter-productive. The higher proportion of mid-cap stocks in the portfolio pegs the risk involved in the fund higher. In this context, conservative investors should consider exiting from the fund altogether.

Portfolio allocation: At the end of January 2003, the fund was invested in equity up to 89 per cent with debt and cash accounting for the rest.

As regards its equity portfolio, the top stocks are Jaiprakash Industries, BHEL, L&T, Crompton Greaves and BEL.

These stocks account for 41 per cent of net assets. More than 60 per cent of net assets are concentrated in mid-cap stocks. Public sector stocks accounted for 23 per cent of net assets. In terms of sectors, the fund sports a fairly diversified exposure.

The exposure to cement through Jaiprakash Industries and L&T can be considered high. That apart, exposure to most sectors has been restricted to less than 10 per cent.

: The performance of the fund in the last three years has been impressive. However, the fund's superior performance in 2000 and 2001 was mainly due to higher proportion of cash in the portfolio rather than due to stock selection.

In addition, the track record in 2000 and 2001 is irrelevant as Taurus Mutual Fund now manages the scheme.

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