The Hindu Business Line : Theme-oriented funds

Unimpressive performances from sector and theme funds in past may have given theme-oriented funds a bad name. But it is theme funds focused on power and infrastructure that have been at the top of the equity fund rankings over the past year.

The list of top performing equity funds in this period is dominated by funds such as Reliance Diversified Power, JM Basic, Can Robeco Infrastructure, ICICI-Pru Infrastructure and Sundaram Capex Opportunities. Returns on these funds have ranged between 80 per cent and well over a 100 per cent for the year, well ahead of the category average of 49 per cent for diversified equity funds and 51 per cent for a broad-based index such as the BSE-500.

Apart from the power/infrastructure funds, a few diversified equity funds also made it to the top of one-year rankings. Taurus Libra Taxshield, Taurus Discovery Stock, Standard Chartered Premier Equity and DWS Investment Opportunity were the key funds. Both the Taurus schemes owe their good performance in recent times to concentrated holdings in select financial and infrastructure stocks.

While Taurus Discovery allocates 23 per cent of its portfolio to JP Associates and another 20 per cent to Reliance Capital, Taurus Libra Taxshield has a 27 per cent exposure to Reliance Capital and a 13 per cent exposure to IDFC. Though these concentrated bets paid off in recent months, they significantly pegged up the funds’ risk profiles. Investors should probably take profits on these funds, if they hold them in their portfolio.

Standard Chartered Premier Equity, a two-year old fund, has delivered exceptional performance through a focus on mid- and small-cap stocks. Though the top sector choices — electrical equipment and finance — are the same as other top performing funds in this period, the stock selection has been quite conventional.

Top holdings in the October portfolio were Shree Renuka Sugars, SREI Infrastructure Finance, Pantaloon Retail and Deep Industries. Investors can retain the fund in light of its impressive performance since inception.

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