The Hindu Business Line : Standard Chartered Premier Equity: Hold

Investors can hold on to their units in Standard Chartered Premier Equity. The fund’s return of 95 cent over the last one year has placed it among the top 5 in the 12-month performance chart of diversified funds.

While the fund has managed to consistently stay in the top quartile of the chart since its inception over two years ago, the recent acceleration in performance can be attributed to the strong rally in mid and small-cap stocks.

Suitability: Premier Equity seeks to invest in stocks of small and medium sized businesses and also identify ‘transformational themes and companies’ that would ride the growth cycle.

The fund’s focus therefore appears to be on companies in the mid and small cap market segment, thus increasing its risk profile.

The returns over the past two years although adequately compensate for the risks, have shown sharp spurt and decline in returns indicating volatility. The fund therefore appears more suitable for aggressive investors. It may not qualify as a candidate for your core portfolio as yet. It could at best be a diversifier with limited exposure, given its short track record.

Performance: Premier Equity has returned 47 per cent since its launch in September 2005, keeping pace with its benchmark BSE 200’s return.

A comparison over the last two years with mid and small-cap funds reveals that the fund trails only Sundaram BNP Paribas Select Midcap and Magnum Midcap.

Over the last year, the fund has moved ahead of its peers in the small, mid-cap and ‘discovery’ segments.

Interestingly, over this period, under performers such as Sundaram BNP Paribas S.M.I.L.E have also regained form. Premier Equity’s portfolio approach has however differed from most of its other peers.

While a good number of them rode the commodity rally with metal stocks, Premier Equity has stayed away from this sector except for holding Maharashtra Seamless for the pipeline theme.

The fund top holdings instead showcased companies in the capital goods and financial sectors. The finance stocks such as SREI Infrastructure Finance and Shriram Transport Finance were good proxy plays on the infrastructure and logistics story.

Active stock-picking and profit-booking also contributed to the fund’s upbeat performance over the last one-year.

While adopting a buy and hold strategy in stock such as Areva T&D Suzlon Energy and Educomp Solutions, the fund took short-term calls in stock such as Deccan Aviation and Global Broadcast News; Alphageo India and ABG Heavy Industries were stocks in the portfolio that returned manifold gains as a result of timely entries.

As the fund’s investment universe mostly comprises of mid and small cap stocks, the fund had stated it wishes to keep its asset size compact to enable manoeuvrability.

To achieve this, it occasionally closes the gate for investments made in lumpsum (which is a minimum of Rs 25,000). Currently, such investments would be accepted up to November 30. Systematic investment plans would, however, continue.

Mr Kenneth Andrade manages the fund from February 2007.

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