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Zurich India Prudence Fund

Dhirendra Kumar

Zurich India Prudence (earlier Centurion Prudence), is an open-ended balanced fund, aiming to balance its debt and equity allocation in the range of 40-60 per cent. Launched in January 1994, the fund was converted into an open-ended scheme in February 1999.

The fund has declared five dividends till date, with the first one in 1995 and the rest after a gap of three years in 1998. The latest dividend was 15 per cent in April 2000. The scheme levies an entry load of 1.5 per cent for investments less than Rs 50 million and there is no load beyond that amount. The redemption is at net asset value (NAV).

Zurich India Prudence has given an annualised return of 17.47 per cent since inception. During the rising markets of calendar 1999, it gained 105 per cent and in the past year ending April 2000, it rose 58 per cent. Today, the fund continues to have a diversified equity portfolio with 60 per cent allocation to equity with automobiles and consumer durables and non-durables accounting for 11 per cent and 13 per cent respectively. The information technology sector accounts for 8 per cent and the construction sector is 7 per cent. The fund has modest holdings in agriculture and food products, pharma and media.

The balance, which the fund has maintained, has held it in good stead in the recent market fall, when it lost just about 6.6 per cent in April. This fund is well-managed and is suited for investors, with a low appetite for risk, seeking superior return from a balanced portfolio. With an allocation of over 50 per cent to equity, dividends declared by the fund will be exempt from any dividends tax for the fund.

Launched during the 1994 rally, the fund had a heady start gaining 33 per cent in the first year. However, with the boom fizzling out and a long bear phase following, the fund lost all its initial gains. The fund consistently posted negative returns till September 1996 but was able to hold on to its asset base because of its debt component. The fund increased its debt allocation from 40 per cent in March 1995 to 63 per cent in March 1997 and pared it to 42 per cent by March 1999. The high interest rates ruling till mid 1996 would have enabled the fund to check a drastic fall in the NAV.

Till March 1997, it had an equity sectoral choice in favour of engineering, oil exploration, auto ancillaries and metals in that order. But by March 1998, this preference was reversed with the growth sectors leading the pack accounting for 19 per cent of net assets. Between September 1996 to January 1999, the fund (before going open-ended) gained 52 per cent rising up to a NAV of Rs 14.75. However, despite the turnaround, the fund at the time of going open-ended witnessed heavy redemptions to the extent of 78 per cent, reducing the net assets to Rs 10.3 crore.

Fund Basics
Objective	Size (Rs cr)	NAV: 5/5/2000	Entry Price	Exit Price	Total Returns
Balanced	52.67	19.72	20.02	19.72	17.47%
Benchmark Comparisons (%)					30/4/2000
	1M	3M	6M	1Yr	3Yr
Fund	-6.61	-17.24	0.72	53.46	32.47
BSE30/IBex	-5.98	-7.85	4.11	34.22	9.15
BSE100/IBex	-11.49	-9.20	11.01	41.33	14.39
Obj. Avg.	-16.14	-14.19	14.76	49.22	25.92
Top equity holdings (31/3/2000)					% of total assets
Himatsingka Seide					5.00
Satyam Computer					4.30
Sundram Fasteners					4.30
Asian Paints					3.90
Hero Honda					3.90
Pidilite					3.70
Vikas WSP					3.70
Macmillan					3.40
Ranbaxy					2.70
Container Corporation					2.60
HPCL					2.50
NIIT					2.30
Titan Industries					2.20
ITW Signode					2.00
Bhel					1.80
Top debt holdings (31/3/2000)					% of total assets
HDFC					7.40
BPCL					5.70
ICICI					3.80
Gujarat Ambuja					1.30

Source: Value Research

Mutual Funds

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