The Hindu Business Line : JM Basic, StanChart Premier

Recent stock price gains have added significantly to equity fund returns. The top performers for a one-year-period have managed returns of between 40 per cent and 78 per cent. The rankings feature a diverse mix of funds with differing sector preferences as well as market cap bias. Here, we take a look at the portfolio moves of two equity funds that have been top performers over the past year.

JM Basic Fund

JM Basic Fund, an open-ended theme fund, has an investment strategy of taking exposure to companies from the industrial sectors. Unlike pure sector funds, this fund restricts exposure to each stock to 10 per cent of its assets. The fund was initially bullish in the capital goods sector, with the sector, at times, cornering close to 84 per cent of the assets. But it has subsequently changed its portfolio strategy to adopt a more diversified profile.

In the latest portfolio, only one-fourth of the assets were invested in capital goods stocks, with sectors such as construction, cement and metals among key exposures.

The fund has a compact portfolio that consists of 27 stocks, with the top three sectors — capital goods, construction and cement — together cornering 54 per cent of the assets. Over the past one year, the fund has been quite aggressive in churning the portfolio, with a relatively high portfolio turnover. Only a few stocks that figured among the holdings a year ago continue to stay in the portfolio. Among these are Reliance Industries, BHEL and EMCO.

StanChart Premier Equity Fund

This fund is open-ended with an investment strategy of focussing on small and medium-sized companies with good long term potential, available at reasonable valuations. The fund has been underweight on the banking sector over a one-year period and banking stocks are not a key exposure in the latest portfolio as well. However, stock picks such as Educomp Solutions and Voltamp Transformers, which have been in the portfolio over the past year, have both been multi baggers and have turned out to be good picks for the fund. For a small asset base, the fund has quite a diversified portfolio with 20 sectors featuring in it.

The top three sectors accounted for a moderate 29 per cent of the portfolio, stock specific exposures were pegged below 5 per cent each of the assets. The fund had higher exposure to consumer non-durables in the early part of 2007, with a 6 per cent weight in the latest portfolio. The fund is not an aggressive churner of the portfolio, but does seem to utilise profit booking opportunities actively.

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