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S. Vaidya Nathan

INVESTORS in the ING Vysya Select Stocks Fund can cut exposures as its performance continues to be unimpressive. Several actively managed funds tend to outperform their benchmark by a comfortable margin. That is not the case with this fund, though over the past six months it has shed less value than its benchmark, the BSE 100.

The slant of the portfolio with a focus on the information technology and pharmaceutical sector would suggest that it should have fared much better. Several IT stocks have posted sizeable gains over the past few months; the rest have held ground.

Stocks of pharmaceutical companies have, despite the battering a few weeks ago, remained on firm ground, with the exception of Dr Reddy's Labs. The top two sector preferences have, however, not helped the fund outperform its peers. Timing of buy and sell decisions appears to have taken a toll.

Over a longer time-frame, too, the performance has been uninspiring. It has trailed its benchmark and a host of peer funds. Annual returns over the past three years have been just 11 per cent, despite the bull market of 2003.

The fund also had a blazing start when it was launched as the ING Growth Sectors Portfolio is 1999, with the NAV rising above Rs 40 on the back of the book in the IT sector stocks. Following the meltdown in tech sector stocks, it has been a downhill ride.

Suitability: The portfolio has a tilt towards large-cap stocks. The risks associated with the fund are similar to typical diversified funds.

Irrespective of risk preferences, investors can contemplate switching to diversified funds with a superior and consistent track record over a three-to-five year period.

Top choices would be HDFC Equity, Franklin Prima and Franklin Bluechip.

Portfolio overview: Despite its small asset size of about Rs 35 crore, the fund has invested in 32 stocks. The top two stocks account for just 5 per cent of net assets.

Outside of the IT and pharma sectors, the fund has exposures to the cement/construction sector.

ACC, India Cements and Jaiprakash Associates, Wipro, Infosys, IOC, Reliance Energy and HPCL are prominent large-cap holdings outside of the top ten exposures.

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