• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Suresh Parthasarathy

Investors can retain their units invested in Principal Large Cap Fund based on its return track record over the last few years.

Though its performance may not match that of established peers such as DSPBR Top 100 Equity and HDFC Top 200, the fund has a key positive in the form of its ability to contain losses.

The mandate of the fund is to invest in large cap stocks.However the fund has significant stocks (less than Rs 7,500 crore market capitalisation) exposure. When several diversified funds moved into cash to protect downsides, Principal Large Cap, on an average, held cash positions of less than 5 per cent even during periods of high market volatility.

Investors with a penchant for high levels of risk can watch the performance before enlarging their investment.

However those intending to take exposure to pure large cap funds will be better off with DSPBR Top 100. Any recovery in the markets usually starts with large cap stocks and these stocks have better earnings visibility.

The fund, over a three-year period, generated compounded annualised returns of minus 2.9 per cent and has bettered its benchmark, BSE 100, by two percentage points and S&P CNX Nifty by less than a percentage point. The fund recently replaced its benchmark from the Nifty to BSE 100.

Over a one-year period the fund has generated a return of minus 31.5 per cent, better than its benchmark. The banking stocks, a key part of the portfolio, that withstood the correction for quite a good period in 2008 buckled, making for poor returns.

On a monthly rolling returns basis, the fund has beaten its benchmark during 23 out of the 36 months, which reflects reasonable consistency.

The fund had 38 stocks in the February portfolio and close to 50 per cent of the assets was invested in top ten stocks.

The mid and small cap stocks (market capitalisation less than Rs 7,500 crore) accounts for 27 per cent of the portfolio. The banking sector was the preferred choice over the last one year.

A few new stocks that moved in along with a changed benchmark were Indian Bank, Bank of Baroda and ITC. The fund has not actively churned its portfolio, barring telecom stocks.

Over the last three months the fund has increased the holdings in consumer non-durables, refineries and auto and has pruned exposures to capital goods and NBFC.

More Stories on : Mutual Funds | Mutual Funds | Recommendation

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line