The Hindu Business Line : PruICICI Emerging S.T.A.R.: Hold

The fund, launched in October 2004, has consistently outperformed its benchmark index Nifty Junior for most of the past year, with its strategy of investing predominantly in companies with market capitalisation between Rs 100 crore and Rs 2000 crore.

Since the market has passed through a huge correction for the past few months, the mid and small-cap stocks have been badly affected.

Performance: Despite small-cap stocks having been hit by the recent market correction, the fund has managed to outpace its benchmark as well as the CNX Midcap. The performance of the fund is better than peers such as Reliance Growth and Birla Midcap but it is line with that of Magnum Mid-cap.

Franklin Prima Fund, that has good long-term track record, has, however, under-performed in this segment.

In the mid-cap space the fund trails Sundaram BNP Paribas Select Midcap, the only fund that has performed extremely well, even compared to some well-diversified large-cap funds during the past year.

PruICICI generated a return of 32 per cent over the past year. During the same period, the mid-cap indices BSE Midcap and CNX Midcap returned 13 per cent and 10 per cent respectively. Its benchmark Junior Nifty returned a measly 5 per cent.

Suitability: The fund predominantly invests in mid- and small-cap stocks, which tend to have low liquidity and are highly volatile.

Since the valuation gap between large-caps and mid-caps has widened, investors with a higher risk appetite can stay invested in the fund, provided this forms a small part of their portfolio.

Portfolio overview: PruICICI has a well-diversified portfolio consisting of 79 stocks.

The fund's exposure to single stock is restricted to less than 4 per cent. The top three sectors account for 30 per cent of the assets.

The top ten stocks account for 27 per cent of the portfolio.

In line with other diversified funds, the capital goods sector has a higher asset allocation. About 21 per cent of the assets are invested in stocks with a market capitalisation above Rs 2,000 crore.

Fund Facts: The Fund is managed by Mr Anil Sarin and its asset size is Rs 807 crore. The NAV per unit is Rs.22.3.

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