Financial Daily from THE HINDU group of publications
Sunday, Dec 01, 2002
Financial Daily from THE HINDU group of publications Sunday, Dec 01, 2002 |
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Investment World
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Mutual Funds Markets - Mutual Funds Alliance Frontline Equity: Hold
INVESTORS in Alliance Frontline Equity Fund can stay with the fund for now. Barely four months after its IPO, it is early days yet to take a call on its performance. Fresh investments need not be contemplated as there appears to be no particular benefit from investing in a fund that replicates the sector weights of the BSE 200 index. Given the possibility of the exit of Alliance Capital from the sponsorship of the fund, investors should also keep a close watch on how events unfold, and exit in the event of a takeover by another fund house. Alliance Frontline Equity Fund was launched with the objective of broadly replicating the sector weights in the BSE 200 index. The stocks in the portfolio may, however, be chosen from outside the BSE 200. The portfolio by end of October 2002 shows that the fund manager has exercised a degree of discretion both in sector and stock allocations: Overweight: The fund is overweight in agriculture (3.2 per cent in the fund against 1 per cent in the BSE 200), finance (11.1 per cent in the fund against 9.1 per cent in the BSE 200), healthcare (8.75 per cent against 7.7 per cent) and oil and gas stocks (27.6 per cent against 26.1 per cent in the index), relative to the BSE 200 index. Underweight: The fund is significantly underweight in FMCG (11.75 per cent in the fund against 15.1 per cent in the index), telecom (3.1 per cent in the fund against 3.3 per cent in the index). The fund has completely avoided sectors such as chemicals, consumer durables, diversified companies and power, though they have marginal weightages in the BSE 200. Stocks: The fund has picked quite a few stocks outside of the BSE 200 index. Some of these are PNB, J&K Bank, Hinduja TMT, ETC Networks, Trent, E Serve, BFL Software and Jindal Steel. The fund has a mix of mid-cap and large-cap stocks. However, it has largely stayed away from stocks in the BSE 200, which carry low liquidity.
Aarati Krishnan
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