The Hindu Business Line : Principal Growth Fund

Principal Growth Fund is a diversified equity fund that invests across the market- capitalisation range, with a bias towards large-cap stocks. The fund had 58 stocks in its portfolio by end-December, the top ten accounting for 25 per cent. We take a look at the changes in the fund's portfolio during the quarter-ended December 2006. Software replaced capital goods to make up 13.2 per cent of the portfolio. The fund enhanced exposure to banks, auto, ferrous metals, industrial products, telecom services and petroleum products. Sectors that fell out of favour and underwent pruning were cement, construction, consumer non-durables, oil and pharmaceuticals.

In the software space, with the allocation being almost doubled, stocks such as TCS, HCL Technologies, and i-flex solutions were all added. While exposures to Wipro and Satyam Computer were enhanced, the fund booked profits in Infosys.

With the entry of Bank of Baroda and Centurion Bank of Punjab, the banking sector weightage went up. Exposures to State Bank of India were added while the fund pared Indian Overseas Bank and ICICI Bank.

Tata Motors, Maruti Udyog and Hero Honda were parked among the auto holdings. Additional exposures were built in Ashok Leyland and Mahindra and Mahindra. The fund enhanced its exposure to industrial products, with Cummins added while the exposure to KEI Industries was enhanced.

The fund added newly listed stocks such as Cairn, Tanla Solutions and Tech Mahindra, probably through the IPO route. The capital goods sector underwent a minor re-jig with exposure to BHEL reduced, while the fund accumulated L&T, KEC International. Siemens, Thermax and AIA Engineering.

Cement stocks were pruned, with Gujarat Ambuja Cement, Grasim Industries and ACC trimmed. Construction sector exposure too came down, with Nagarjuna Construction, IVRCL, D.S.Kulkarni and Jaiprakash Associates all moving out, while Gammon India, Unity Infraprojects and Parsvnath Developers were added.

Mr Shyam Bhat manages Principal Growth Fund.

Suresh Parthasarathy

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