The Hindu Business Line : Theme-based funds ahead of diversified

As the markets moved very sharply, with 1,500 points added to the Sensex within a short span, one-year returns on equity funds climbed to the 60 per cent mark, from the 40 per cent mark a couple of weeks ago. The majority of the top 10 funds in the one-year rankings are theme-based and, more particularly, piggybacking on the infrastructure sector.

This week, we take a look at the portfolio of the top-performing fund and the fund that figured fourth in the rankings.

Reliance Diversified Power Sector Fund (Invest): The fund’s investment objective states that its universe will be predominantly equity or fixed-income securities of companies in the power and other associated sectors. The asset size having grown sharply by more than 100 per cent to Rs 1,790 crore in the past six months, the fund has accumulated a cash position of 31 per cent.

With the power sector acquiring traction in recent times, the fund has diversified within the power space. The portfolio consists of just 21 stocks. The top three are from power manufacturers, followed by power equipment suppliers and transmission companies. As its size has grown, the fund has preferred to adopt a buy-and-hold strategy, with several stocks continuing in the portfolio for close to a year. Suzlon Energy was the exception. The fund sold the stock completely and it has been recently been added to the portfolio.

Apart from its large-cap exposures, the fund has taken exposure occasionally to small-cap stocks, such as Shri Ramrupai Balaji Steels, in which the fund booked profits completely before the same was suspended for trading. Reliance Energy, Torrent Power, ABB and Siemens are the key large-cap holdings, Voltamp Transformer, Jai Balaji Industries and Apar Industries represented the mid-cap space.

Principal Personal Tax Saver (Hold): Principal Personal Tax Saver is an open-ended ELSS fund. Usually, tax-saving funds take advantage of the lock-in period to take exposures to mid- and small-cap stocks. Such exposures helped the fund outpace large-cap-focussed peers over the one-year period, helping it find a place among the top ten performers. Principal Tax Saver has aggressively churned the portfolio. Only seven stocks remained in the portfolio over the year. Capital goods, software and finance were the top choices.

Some of the stocks accumulated earlier, but that exited completely were BHEL, HDFC Bank, ICICI Bank and Reliance Energy. Some of the prominent mid- and small-cap stocks present in the latest portfolio are Bharat Bijlee, Adhunik Metaliks, Navneet Publication and McNally Bharat Engineering.

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