The category of diversified equity funds is studded with some big stars that attract all the attention -- thanks to their size and sparkling performance.
Equally true is the fact that most of the smaller funds have remained small over the years, owning to their poor performance records.
But, among these small funds, there are a few which shine brightly when it comes to performance; unfortunately, they get over-shadowed by the heavyweights.
We present five small funds. They don't have the assets (investment and money) equal to 25% of the category average (as per the portfolios of the funds in April 2005).
Yet, if one takes the average five-year return, which is 19.24%, then these funds definitely shine.
Alliance Basic Industries
Launch: January 2000
Fund rating: 5 star
Net Asset Value: 38.74
5 year returns: 32.77%
The fund maintains an exceptionally concentrated portfolio by investing in very few stocks. As per its portfolio at the end of April, the fund held only 16 stocks, with the top three alone accounting for 30% of the total portfolio.
Bonanza Exclusive Growth
Launch: February 1995
Fund rating: 4 star
Net Asset Value: 20.91
5 year returns: 28.33%
The year 2001 was the brightest patch in the fund's history. When, on an average, all these funds performed badly and showed a negative return of 19.09%, this fund showed a negative return of only 0.4%. What causes concern is its performance in 2004.
Over the years, however, the fund has outperformed the category.
Tata Growth
Launch: June 1994
Fund rating: 4 star
Net Asset Value: 21.05
5 year returns: 27.21%
After a very forgettable start in 1994 followed by a poor performance, the fund staged a strong comeback in 2000 and has fared well since then.
GIC Fortune '94
Launch: December 1994
Fund rating: 4 star
Net Asset Value: 21.27
5 year returns: 25.18%
This fund delivered poor returns till 2001. However, since 2002, the fund has delivered good returns, but only in patches. It will have to perform better to catch the attention of the investors.
UTI Grandmaster
Launch: June 1993
Fund rating: 4 star
Net Asset Value: 23.56
5 year returns: 22.29%
The fund's returns have fluctuated widely in comparison to the category. For example, for the quarter ended June 1996, the fund delivered 10.35% returns, when the category could only manage 6.55%.
On the other hand, for the quarter ended March 2000, the category delivered around 6% returns on an average, while the fund lost close to 12%.
In recent years, though, the fund has managed to avoid such volatile swings and moved more in line with the category.
Note
The NAV and returns are calculated as on July 13, 2005. The average 5-year return of diversified equity funds is 19.24%
Fund rating = The rating is a quick and easy way to identify mutual funds that have produced strong risk-adjusted performances vis-a-vis their peers. The funds with a 5-star rating are the best and those with a 1-star rating are the worst. Do note, 'best' does not indicate the highest return when compared with the rest. It means you will get a good return without putting your money at too much risk.
Illustration: Uttam Ghosh
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