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'Dividend and bonus buoys KP Bluechip assets'

Aabhas Pandya

Thanks to a liberal dividend payout of 65 per cent and a 1:1 bonus in March, the diversified-equity fund from Kothari Pioneer, Bluechip has witnessed strong inflows with assets vaulting by 200 per cent from Rs 77.58 crore on February 29, 2000 to Rs 232.58 crore as on March 31, 2000.

After accounting for the issue of bonus units and fresh inflows, the fund's unit capital has moved up from Rs 13.62 crore to Rs 84.66 crore. With fresh inflows in Bluechip, the fund had 31 per cent of its assets in money markets and government securities as on March 31. The large cash position would have helped the fund invest in quality stocks at attractive prices with the downswing in equity prices in March and first week of April.

With a diversified portfolio, Bluechip lost only 17.75 per cent in the turbulent period between March 7 and April 6 against an average decline of 26.15 per cent for open-end, diversified equity funds. Information technology continues to be the top-weighted sector in the fund's portfolio at 28.27 per cent though it is sharply down from 40 per cent on February 29. This is attributed to the surge in the fund's assets under management and a drop in the prices of infotech stocks.

The fresh inflows in the fund has helped it augment holdings in economy stocks like Mahindra & Mahindra, Punjab Tractors, L&T, BHEL, Asian Paints, HPCL and Siemens. The fund has also consolidated its holdings in FMCG stocks of ITC, HLL and Nestle and in software stocks like Satyam Computer, NIIT, Infosys, HCL Tech and PSI Data Systems. Satyam Computer is the top holding of the fund with a weightage of 9.52 per cent followed by NIIT at 8.82 per cent.

Kothari Pioneer has also received fresh inflows in its open-end tax planner, Taxshield and Infotech fund where it had declared a payout of 80 per cent and 60 per cent, respectively. The assets under KP Taxshield have gone up from Rs 12.11 crore to Rs 30 crore as on March 31, 2000. With fresh inflows in the fund, the unit capital has moved up from Rs 3.65 crore to Rs 9.67 crore. The tax planner has 60 per cent of its assets in current assets while only 40 per cent of the corpus is invested in equities. Since inception in April 1999, the fund has given a whopping return of 220 per cent. In the Infotech fund, Kothari Pioneer has so far paid a total dividend of 160 per cent in just six months coupled with a 1:1 bonus.

So far, Kothari Pioneer has successfully managed to rope in fresh money by doling out attractive dividend and bonus units. And unlike most other players, who have paid dividends without making noise to prevent dividend stripping, Kothari Pioneer has aggressively advertised its dividend and bonus payouts. The AMC has also never imposed hefty entry and exit loads to dissuade inflow of hot money. This strategy has worked well for the AMC so far but whether it will hold in the future without affecting the performance of its funds remains to be seen.

Source: Value Research

Mutual Funds

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