The Hindu Business Line : Principal Growth: Hold

Investments in Principal Growth Fund may be retained. No fresh investments need to be considered at this juncture, though the fund has delivered returns in excess of its benchmark, the Nifty, every year since its inception.

Over the past three years, returns have been on par with that delivered by Franklin Bluechip, which, by virtue of its investment in only large-cap stocks, has a lower risk profile.

Principal Growth, with an investment style that cuts across market-cap categories (predominantly large-cap, though) should have delivered higher returns commensurate with risk.

Though the extent of outperformance of its index has not been substantial, its track record of returns does provide a cushion.

The fund follows an investment strategy that focuses on a blend of small-, mid- and large-cap stocks. While this does enhance the potential for returns, it also increases concomitant risk.

However, the flexibility in investing across ranges does enable the fund to capitalise on trends in any particular market-cap category, given the fund's tendency to periodically book profits on small/mid-cap stocks.

Portfolio: The fund holds 52 stocks in the portfolio. The top three sectors account for 35 per cent of assets. The capital goods sector holds the top slot for the asset allocation.

Stocks with market capitalisation with less than Rs 2,500 crore account for 30 per cent of assets; . the rest of the portfolio is populated with stocks that enjoy a market cap in excess of Rs 5,000 crore.

The fund actively manages the portfolio, and the shuffling of the portfolio among software stocks is a clear indicator. The fund adopts the approach of buy-and-hold in the case of large-cap stocks. ITC, Infosys, HLL and Reliance Industries have been a part of the portfolio for close to a year.

In the small/mid-cap space, the approach appears to be one of cashing in on gains regularly. Blue Dart appears to have been an exception to the rule, as it's figured in the portfolio for about a year now.

Fund facts: Launched in October 2000, the fund is available in both growth and dividend options. Mr Shyam Bhat is the manager of the fund, which has about Rs 370 crore under management.

The fund levies no entry load for investments up to Rs 5 lakh; for investment above Rs 5 lakh and up to Rs 3 crore, the entry load is 2.25 per cent. The minimum investment amount is Rs 5,000.

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