Fidelity India Growth Fund: Invest

Calling a bottom in the stock market may be popular but very few can actually do it successfully. For the rest, buying a portfolio of stocks offered by mutual funds provides the next best substitute. It is in this context that Fidelity India Growth, an aggressive growth fund, makes an attractive investment bet.

The fund holds minimum cash and focuses on blue chips. While its strategy to remain fully invested across market cycles promises upsides from a sudden market reversal (if any), its blue chip and large-cap investing bias promise some stability in volatile markets. What's more, the fund has an impressive scorecard to talk about. Its three-year return of 24 per cent places it among the top five in the large-cap oriented fund category, and way over the 17.6 per cent compounded growth registered by its benchmark BSE 200 in the same period. Investors can also consider taking the systematic investment plan route to buy units of this fund.

Suitability : While the fund's aggressive investment strategy would help it make the most of a secular bull market, the same cannot be said of falling markets. Given its growth tilt, the fund may not be as adept at containing declines in case of a prolonged fall in the markets. The fund, therefore, makes for a good diversifier option only.

Performance : Though Fidelity Growth's investment strategy doesn't promise to keep its losses minimal in a falling or volatile market, the fund has done decently well over the last one year in this regard. With the markets on a falling spree, the fund's one-year returns stand at a negative 18 per cent. This is better (by a reasonable margin) than its benchmark as well as some of the well-established peers such as HDFC Top 200.

Its three-year returns compare favourably over peers such as Fidelity Equity and Franklin India Blue Chip too. A more diversified portfolio compared with peers appears to have helped it here. The fund's top-notch performance in the volatile markets of 2010 also infuses confidence in its ability to navigate similar markets in the years ahead.

It boasts of a good performance record in a bull market too. From the March 2009 lows, though, the fund generated absolute return of 160 per cent, placing it among the top large-cap funds. While some of the best funds in its category had lagged that year, owing to ill-timed cash calls, Fidelity Growth managed to fully participate in the rally, thanks to its minimum cash strategy.

Portfolio : With a portfolio of over 50 stocks, its portfolio is fairly diversified, what with about 20 stocks making less than a per cent each. Top ten stocks account for 46 per cent of the portfolio, while the top three sectors make up about 38 per cent. In terms of market-cap, while about three-fourths of its portfolio is made up of large-cap stocks, mid- and small-cap stocks account for 6 per cent and 10 per cent, respectively.

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