IDFC Premier Equity Fund - Handsome returns, though at some risk
5/9/2011 12:22 PM Monday
Are you one of those who like to pursue big returns and have an appetite for some risk as well? Yes? Then this fund is surely meant for you. IDFC Premier Equity is a fund that has not only provided premier returns to its investors since its inception, but has also managed its risk quiet well.
The fund has provided astonishing annualised returns of 23.54 per cent since its inception. In the one- and three-year period, the fund has outpaced its peers by 849 and 961 bps respectively.
The fund has done exceptionally well in both bull and bear market periods. Despite the fact that the fund is truly a mid- and small-cap fund, it still managed to beat its large-cap peers in containing its investor losses during the market fall of 2008. It has been very consistent in rewarding its investors with top quartile returns for most of the years of its existence, except for CY2009 when it managed to stay ahead of the category returns, but did not manage to be on top in terms of its performance in the mid- and small-cap funds category.
In CY2010 it made a good comeback, beating the category returns by close to 1200 bps and taking the fifth position among the 62 funds in this category. Kenneth Andrade has been managing this fund since 2007 and its performance says it all. Kenneth brings in stability and consistency to the fund’s performance and asset allocation and at IDFC, he also manages many other funds like equity, small-cap and mid-cap (SME) and strategic sector (50-50), etc, of which most funds have managed to beat the category returns over a longer run.
The fund follows a venture capitalist investment approach wherein it applies top-down stock screening and invests in companies depending upon the scalability of business operations and the ability to grow. Subsequently, it selects a young company in that industry having dynamic management skills and that too available at cheap valuations. The fund also takes active calls on its portfolio. It continues to follow the consumption theme by investing over 19 per cent of its assets in FMCG stocks.
It believes in investing in a concentrated portfolio of over 25-30 stocks and it currently holds 28 stocks, of which top 10 stocks contributed over 44 per cent of the total assets. Looking at the market volatility, the fund has parked close to 20 per cent of its assets in debt instruments while for its equity portfolio, over 90 per cent of its assets are invested in the mid- and small-cap stocks. It is not open for subscription at any point of time. It closes the subscription when the AMC feels that they do not have an idea or opportunity for investment in the market. However, SIPs are allowed and investors with an appetite for risk can take this route to invest in this fund.
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