The Hindu Business Line : Deutsche Alpha Equity: Sell

The fund's performance has slipped and it has not capitalised on the rise in large-cap stocks; as a result, it has trailed the Nifty as well as the Sensex by a few percentage points over the past six months. Actively managed equity funds tend to outpace the benchmark indices comfortably; this facet has been absent from the fund's performance.

It has lagged funds with a large-cap tilt in a more pronounced manner and under-performed most equity funds. This has been the case over a one-year period as well; courtesy, its performance in the first year, the fund sports numbers that appear respectable since its launch in January 2003.

This recommendation represents a change in our stance on the fund; based on a resilient performance in the earlier part of the year in a choppy market, we had suggested that investors could add Deutsche Alpha Equity, as a peripheral holding in a portfolio of funds, in May.

It had a fairly decent start and then stumbled before making a recovery of sorts. In retrospect, it proved a fleeting one. Despite a small asset base of less than Rs 100 crore, which should have provided for flexibility in fund management and lead to higher returns, the fund has not done too well.

In this backdrop, we feel investors would be better off selling their holdings and switching to diversified funds with a superior track record.

The likes of HDFC Equity, Franklin Bluechip and Reliance Growth appear to be better options in the large-cap space.

Investors could also consider Magnum Contra and Franklin Prima, which have a portfolio of several nascent large-cap stocks; the former has over the past six months also cultivated a large-cap tilt after riding the boom in mid-cap stocks.

Portfolio overview: In September, the fund appears to have largely moved out of equities, as it held about 55 per cent of assets in cash and cash equivalents at the end of the month.

This strategy might be a case of good timing, though it may not lead to advantageous situations always.

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