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S. Vaidya Nathan

Risk-averse: Book partial profits Others: Hold

INVESTORS in this fund can partially book profits to lock into gains of about 90 per cent over the past year. This would be particularly appropriate for investors with a low preference for risk.

But such investors too would be better advised to hold a part of their exposures (say, 40-60 per cent) as the broad market appears to have room for upside — one that the stocks in Alliance Basic's portfolio could participate in. The NAV of the fund is Rs 21.95.

There may be no pronounced run-up in the next month or so. But if fund flows from FIIs show a firm trend in early 2004, the strategy of retaining a part of the exposures may pay off. Other investors (those with a penchant for high risk) can stay invested.

They may reap the benefits of any uptrend in the NAV on their entire holdings. But this approach carries with it the risk of losing some of the gains notched up over the past year.

The fund has a portfolio of frontline stocks across economically-sensitive sectors. Quite a few, including as Tata Motors, SBI, Hindustan Petroleum, Bajaj Auto and State Bank of India have room for gains from present levels.

The fund has also limited its exposure to a small number of stocks, which has helped performance. This approach also cuts the number of correct calls to be made. The fund has remained fully invested.

Suitability: Sector-specific funds are appropriate only for investors with a penchant for high risk. But Alliance Basic Industries, due to its wide investment ambit, has a more diversified portfolio. It has steered cleared of stocks in information technology, pharmaceutical and consumer product companies.

Due to its more diversified portfolio, the associated risks are lower than a sector-specific fund focussed on just one sector, such as IT, pharma and FMCG. The fund has delivered returns that more than compensate for the risk element involved.

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