The Hindu Business Line : Alliance Equity:Invest in small lots

AN investment may be considered in Alliance Equity Fund as it has an impressive track record and its portfolio appears well-positioned to capitalise on growth opportunities in the economy.

With a small asset base of about Rs 250 crore, the fund is well placed to churn the portfolio. This assumes importance as it has an aggressive fund management style.

The fund will move to Birla Sun Life Mutual Fund in September and be christened as Birla Sun Life Equity Fund.

As required by SEBI's regulations, investors in this fund have an opportunity to exit at NAV till September 1.

The NAV of the fund is about Rs 100.

Investors should refrain from choosing the exit option.

Unlike a few other equity funds from the Alliance stable, this fund has been actively and well-managed, ever since the ownership change was worked out several months ago.

The fund has comfortably outperformed benchmark indices and most of its peers. In rankings across several time periods, the fund figures as one of superior performers.

We are confident that the fund can sustain its performance under the Birla Sun Life fold. It can become the top performer among equity funds in that fund house's stable. Investors could, however, take exposures in a phased manner by using a systematic investment plan. This could help them take advantage of any dips in the broad market.

Suitability: The fund is appropriate for investors with an appetite for risk. Given its aggressive stock selection, the risks associated with it are higher than one would associate with a typical diversified equity fund.

It has delivered attractive returns to more than adequately compensate for the risk element. Investors could opt for the Dividend Option and re-investment of the dividend; this would enable them take advantage of superior tax efficiency.

Portfolio overview: Alliance Equity has a more diversified portfolio now than at the turn of the year; it has moved away from the concentrated exposures to a few sectors and stocks of four years ago.

For a fund that thrived on the IT sector in its initial years, its exposure to this sector is now less than 10 per cent of assets.

The fund has shown a high degree of loyalty to stocks such as Bharti Tele-Venture, United Phosphorus, Trent, Pantaloon Retail, Infosys and Siemens, which remain part of its core holdings.

Quite a few of its top holdings appear to hold promise of steady gains and the ability to weather a downturn in the market with modest losses.

Fund facts: Alliance Equity Fund was launched in August 1998. The minimum investment amount is Rs 5,000. The fund manager is Mr Ashit Kothari.

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