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

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

Srividhya Sivakumar

Long-term investments can be considered in IDFC Imperial Equity Fund considering its impressive performance in the last three years.

In spite of its relatively short track record, the fund’s performance over the three-year period compares favourably not just with the diversified fund category-average but also over similar large-cap focused funds such as Kotak-30 and Sundaram BNP Paribas Select Focus.

The fund’s ability to contain downside vis-À-vis its benchmark BSE-200 also underscores our recommendation. But given its focus on building a portfolio of large, recognised and fundamentally strong companies besides its tendency to lag its benchmark during market rallies, the fund may be more suitable for cautious or first time investors.

Performance: IDFC Imperial Equity invests in well-managed growth companies that are available at reasonable valuations. This twin emphasis on larger companies and valuations appear to have come to the fund’s aid in arresting NAV falls during market slides. The fund has delivered particularly well during market downturns, bettering its benchmark the BSE 200 during the corrective phases in March 2007, January 2008 and October 2008.

The ramp-up in debt exposure it undertook in 2008 may also have helped it better performance during the debt rally in late 2008. Over the last three years, the fund has returned 12.7 per cent, beating both its benchmark and category average comfortably.

That said, it hasn’t displayed as much agility in beating or even keeping pace with its benchmark during market rallies; its returns on the upside have lagged. For instance, in the market rallies from June 2007 lows to Oct 2007 or during the run-up in equities since August-December 2007, the fund seems to have fallen short of the returns generated by its benchmark. What’s more, its performance in the recent rally too has been curtailed, with its 80 per cent returns lagging the 108 per cent delivered by BSE-200. That the fund had double-digit exposure to debt even as late as July 2009 may explain its relatively lower returns. This conservative strategy suggests that the fund may be more suitable for conservative investors.

Portfolio: The portfolio, despite its relatively fewer stock holdings, appears to have been churned quite frequently.

For instance, the exposure to the stock of Indian Oil Corporation was gradually lowered between March-May 2009, and shown the exit in June; only to be substantially hiked in September.

Similar entries and exits have been seen in the stocks of ITC, Infosys Technologies and M&M too. In terms of sector exposure, while debt accounted for a substantial portion of its investments (25 per cent in March), it has now been lowered considerably (3.6 per cent). Banks, software and automobiles enjoy a high allocation. The fund is managed by Mr Kenneth Andrade.

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