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Fund Pick: LIC Dhan 88 (1)

Dhan 88 (1) is a ten-year close-ended equity linked tax saving scheme. Till date, it has declared two dividends of 12 per cent in March 1994 and 10 per cent in March 1995. The fund is available for repurchase at 3 per cent exit load on the previous week's NAV.

Since its launch, the fund has given an annualised return of a negligible 1.15 per cent against a 12.51 per cent gain in the Sensex. The fund is a case of a turnaround; after its restructuring in the end of 1998, it has been able to ride the boom in the markets and scale the steep valuations of growth stocks.

By June 1999, the fund had gone 62:38 in favour of the growth stocks vis-a-vis cyclicals. The fund was a key beneficiary of the April-June 1999 cyclical rally. During calendar 1999, the fund gained 99 per cent.

Currently, the pharma sector leads the portfolio with 35 per cent allocation followed by FMCG at 22 per cent and software at 18 per cent. The fund has retained a 20 per cent stake in cyclicals. As on February 2000, it gained 44 per cent for the quarter and 154 per cent for the year.

The fund has a quality large-cap portfolio diversified across sectors. In the near term, the fund will benefit from the change in the market sentiment towards pharma, FMCG and cyclicals. Till then, the stock picking strategy of the fund will be under test.

Launched in March 1993, the net asset value of the fund peaked to Rs 13.4 in February 1994. Till 1999, the fund consistently underperformed the broad markets by a wide margin.

The fund was one of the participants in the 1994 IPO rally. The IPO boom went bust leaving the fund with a junk portfolio of illiquid stocks. The fund, managed passively, initiated the realignment of the portfolio only towards the end of 1998.

It also missed the opportunities during the brief upside in 1996 and 1997. The restructuring of Dhan 88 (1) in favour of the growth stocks has brought about a turnaround in the performance of the fund. But going by the track record of the fund and other equity funds of LIC Mutual Fund, the fund is unlikely to be a consistent performer.

Fund Basics
Objective	Size (Rs cr)	NAV (Rs) 15/3/2000	Exit Price	Entry Price	Total Returns
Tax planning	8.59	8.40	8.15	—	1.15%
Benchmark Comparisons (%)					29/2/2000
	1M	3M	6M	1Yr	3Yr
Fund	12.55	43.69	64.14	153.71	19.38
Sensex	2.08	17.41	11.83	60.22	14.26
Nat. Index	11.52	46.89	50.80	118.54	27.62
Obj.Avg.	12.26	44.09	62.46	129.77	28.55
Top holdings (5/1/2000)			Market value (Rs cr)		Net assets (%)
Satyam Computer			1.43		16.65
Sun Pharma			1.27		14.78
Ranbaxy			0.96		11.23
Hoechst			0.77		9.02
Bajaj Auto			0.55		6.41
Cadbury			0.48		5.62
McDowell			0.34		3.93
HPCL			0.32		3.74
Marico			0.30		3.46
Hindalco			0.29		3.39
ITC			0.27		3.12
Henkel Spic			0.25		2.92
Mahindra & Mahindra			0.24		2.83
Amara Raja Batteries			0.23		2.65
Bata India			0.15		1.78
Pentamedia			0.12		1.44
Godfrey Phillips			0.10		1.22
VSNL			0.10		1.11
MTNL			0.09		1.05
GE Shipping			0.09		1.02

Source: Value Research

Mutual Funds

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