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Sun F&C Value Fund

Dhirendra Kumar

Launched in July 1997 as an interval fund, Sun F&C Value Fund was made open-end in February 1998. The fund is not a conventional value fund, but seeks value in growth stocks. The fund has paid four dividends of 25% September '99, 55% in March 2000, 35% in December 2000 and 30 in February 2001. Entry into the fund carries a 1.75% load while exit is at NAV.

FUND BASICS   Objective    Size (Cr)    NAV: 23/04/2001    Exit Price    Entry Price    Total Return   Growth   27.70   16.56   16.56   16.85   17.59%

The fund faced some teething problems immediately after its launch since the markets were gripped by a bear phase. However, it did not take long before the fund managed to buck the trend. As Sun F&C Value seeks value in growth stocks, it started off with a predominant allocation to the golden triangle of software, pharma and FMCG stocks.

However, over time, the fund has shown a greater preference for software sector. At the same time, the fund has held an average one-third exposure to cyclical stocks. The sectoral spread apart, the fund has never maintained concentrated investments in individual stocks like some of its aggressive peers. The Rs 28 crore fund is thinly spread across around 42 stocks with some mid cap allocation. Following this strategy, it vaulted by 129% in year 1999, against the Sensex gain of 64% over the same period.

BENCHMARK COMPARISONS (%)      1M    3M    6M    1Yr    3Yr   Fund   -3.06   -24.44   -9.86   -30.36   11.44   Nifty Tot. Ret.   -2.17   -13.81   -2.24   -18.78   -0.51   Sensex   -2.43   -14.58   -2.97   -23.07   -5.24   Obj. Avg.   -2.98   -20.27   -12.56   -29.50   3.79

    However, with the technology rally gaining momentum in early 2000, the allocation to this sector also increased. With the fund later augmenting the exposure at lower levels in late 2000, the allocation to this sector accounted for an average 44% of the portfolio last year. While the fund managed to finish 2000 in line with the Sensex, it has remained volatile with a high tech exposure. Further, the fund seems to have witnessed a sharp redemption in March 2001, with the size plummeting from Rs 47 crores to Rs 28 crores. This coupled with its technology exposure has cost the fund a whopping 25% against a category loss of this 18.68%.

Sun F&C Value has given a reasonable return of 17.59% since launch. While the fund toned down its tech exposure and has a diversified structure, it remains to be seen if this continues. Further, its multiple marginal holdings on a small asset base coupled with its mid cap-stocks, could be a drag on the fund.

Top Holdings (30/03/2001)      Value (Cr)    % of Assets   HLL   2.55   9.19   Reliance Ind.   2.50   9.03   I T C   1.79   6.47   Infosys Tech.   1.35   4.86   Wipro   1.29   4.67   Larsen & Toubro   1.11   3.99   HPCL   0.91   3.28   Asea Brown Boveri   0.81   2.94   BHEL   0.76   2.74   Hoechst Marion Roussel   0.72   2.60   N I I T   0.72   2.59   VSNL   0.70   2.51   Glaxo India   0.67   2.42   Grasim Ind.   0.64   2.32   Pfizer   0.63   2.28

Source: Value Research

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