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Fund Pick: Alliance Equity Fund

Background
Alliance Equity Fund, the aggressive growth fund of Alliance Capital has been a blockbuster in its brief history. The 100 per cent equity fund was launched following the impressive performance of its all-equity Tax Saving Fund - Alliance Capital Tax Relief '96 and Alliance '95 (Balanced with 70 per cent equity and 30 per cent debt).

The fund, launched in August 1998, had mobilised Rs 16 crore in its initial offer period. Currently, the size of the fund is a whopping Rs 707 crore. With dividend from mutual funds becoming tax-free for three years, the fund paid a 30 per cent dividend in October 1999. Entry into the fund carries a 1.75 per cent load.

Performance
Alliance Equity, has gained handsomely in a brief period of one and a half years. Since its launch, the fund has given an annualised return of 219.69 per cent, handsomely outperforming its benchmark BSE 200 by 131 per cent and BSE Sensex by 153 per cent. For one year period ending January 31, 2000, the fund has returned 274 per cent and ranks first among 36 open-ended diversified equity funds and in the quarter ending January 31, 2000 the fund has given 85 per cent returns and ranks fourth among 39 funds.

Alliance Equity has been able to achieve these returns with its big bets in the golden triangle of infotech, pharma and consumer stocks. The fund for the quarter ending December 1999 has 42 per cent exposure in software. However, over the past two quarters, the fund has significantly pared its exposure in FMCG, thus being able to sidestep the setback in the particular sector. Apart from pharma at 7 per cent, the fund has over a time augmented its exposure in Telecom (11.4 per cent) and Media (10.4 per cent).

The fund also has a decent exposure to the cyclical sectors of capital goods, banking, cement and chemicals. The actively managed fund is spread over 63 stocks with the top ten accounting for 59 per cent of net assets as on December 31, 1999. Interestingly, despite being a late entrant, the fund is ahead of its peers over time periods since launch.

Outlook
Alliance Equity Fund has been successfully able to ride the momentum in select stocks with high turnover. The fund has successfully followed similar strategy with its balanced fund, Alliance '95 and Alliance Capital Tax Relief '96. The fund has the potential to give significantly higher returns with high volatility. The fund is ideally suited for medium-term investors with a periodic investment plan.

Fund Basics
Objective	Size	NAV: 14/02/2000	Exit Price	Entry Price	Total Returns
Growth	707Cr.	54.38	54.38	55.31	219%
Benchmark Comparisons (%)					31/1/00
	1M	3M	6M	1Yr	3Yr
Fund	14.2	84.7	138.1	273.6	N.A.
Sensex	4.0	17.1	14.6	57.0	N.A.
Nat. Index	9.6	38.8	44.6	98.1	N.A.
Obj. Avg.	6.7	42.1	62.2	116.0	35.5
Top Holdings (31/12/99)			Mkt. Val. (cr.)		Net Assets (%)
Infosys Technologies Ltd.			58.79		11.25
Zee Telefilms Ltd.			53.00		10.14
Satyam Computer			45.53		8.71
Global Tele-Systems Ltd.			30.65		5.86
Himachal Futuristic			28.79		5.51
Larsen & Toubro Ltd.			22.24		4.25
SSI			22.18		4.24
Digital Equipment (India) Ltd.			19.60		3.75
H D F C Bank Ltd.			13.73		2.63
Mastek Ltd.			12.53		2.40
N I I T Ltd.			12.37		2.37
Citicorp Securities			10.85		2.08
Silverline Industries Ltd.			10.13		1.94
Dr. Reddy'S Laboratories Ltd.			10.09		1.93
Pentafour Software			9.35		1.79
Grasim Industries Ltd.			8.92		1.71
Leading Edge Systems Ltd.			8.53		1.63
Vikas Wsp Ltd.			7.91		1.51
Pfizer Ltd.			6.87		1.32
Indian Shaving Products Ltd.			6.62		1.27

Source: Value Research

Mutual Funds

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