The Hindu Business Line : Principal Resurgent India Equity: Hold

UNITHOLDERS of Principal Resurgent India Equity can retain their holdings. The fund, which invests in stocks of companies that are likely to benefit from turnaround or restructuring, has delivered good returns over the past year.

Its return of 60 per cent over a one-year period is comparable with other top performing diversified funds such as HDFC Equity and HDFC Top 200. The fund has a good three-year track record, as it underwent a change in management a year ago. Investors may, therefore, avoid fresh exposures for now.

Suitability: The fund is low on risk as it invests predominantly in large-cap stocks and its portfolio is diversified. The focus on restructuring or turnaround provides scope for high returns, although this would be accompanied by higher risks. Investors can continue to hold on to the fund but it need not form a part of their core portfolios.

Performance: The fund was launched in June 2000 under the banner of Sun F&C Mutual Fund. It has been a strong performer since its launch, outperforming a majority of its peers in the bear market of 2001. Over the next two years, the fund continued to turn in an impressive performance.

Its performance slowed down in 2004, when it returned about 20 per cent. In 2005 too , its performance has been tepid, trailing that of several of its peers. Significant cash holdings may act as a drag on performance (In November 2004, the fund had invested only 60 per cent of its assets).

Portfolio overview: About 45 stocks make up the portfolio and the top ten holdings account for about 35 per cent of the total holdings. About 70 per cent of its assets are invested in stocks with a market cap of more than Rs 3,000 crore.

The fund has an asset base of about Rs 120 crore; the total assets have risen significantly from Rs 3 crore in June 2004. Prominent mid-cap stocks that figure in its portfolio include IVRCL Infrastructure, Crompton Greaves, Gokaldas Exports, Sesa Goa, Godrej Industries and Shoppers' Stop, to name a few.

Fund facts: The minimum investment amount is Rs 5,000. Dividend and growth options are available.

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