The Hindu Business Line : Taurus Discovery Stock: Book Profits

UNITHOLDERS in Taurus Discovery Stock can use the recent upswing in share prices to book profits. Its performance during bearish or volatile phases in the market has not been encouraging. The fund suffered a significant setback in the bear market of 2000-01. Over the past three months, when the market has been especially volatile, about 15 per cent has been shaved off from its NAV.

The fund has a risky investment style, with concentrated exposures to three or four stocks. It also believes in an unconventional approach to investing, picking stocks that have either under-performed the market or are temporarily out of favour. The strategy could deliver returns over a long term, and has done so in funds such as Magnum Contra. In Taurus Discovery, while the performance has picked up over the past two years, it has been inconsistent over longer periods.

Performance: Had you invested in the fund in November 2000 and held on till now, your returns would have been lower than what you would have earned by investing in the basket of Sensex stocks. This is disappointing, more so because the fund has a mid-cap bias. In the bull market of 2003, the fund barely delivered market returns, when the majority of funds outperformed benchmark indices by a mile.

In 2004 and 2005, it has done better and has beaten the average equity fund. But funds such as Magnum Contra and Reliance Growth remain ahead of the fund by a good margin.

Portfolio overview: The top three stock holdings of the fund — SRF, NDTV and Jaiprakash Associates — alone account for close to 50 per cent of the total assets.

Given the small asset base, the investment is unlikely to be spread over too many stocks. This level of concentration in holdings, however, puts pressure on the top stocks to deliver the bulk of the performance.

These stocks have been the top holdings of the fund for at least a year and have delivered handsome returns over the period.

The fund invests predominantly in mid-cap stocks. Only 15 per cent of the assets are invested in stocks with a market capitalisation of more than Rs 3,000 crore.

Fund facts: Taurus Discovery Stock was launched in 1994. It has an asset base of Rs 22 crore. There is no exit load

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