GIC Fortune: On road to recovery Almost all open-end equity funds have brought down their entry and exit loads over the last one year. Effective from March 9, 1998, GIC Mutual Fund has brought down the entry load in GIC Fortune '94 from 6 per cent to 2 per cent. The fund does not carry any load on redemption.
GIC Fortune '94 seeks long term capital appreciation with periodic dividend distribution. Upto 85 per cent of net assets are to be invested in equities and rest in fixed-income securities and cash equivalents. Currently, the fund has a 83 per cent exposure in equities, around 9 per cent in debt and balance in cash equivalent. The first open-end growth scheme from a public sector mutual fund has failed to perform till date. Initially, the fund was able to guard its assets in a sliding market but the NAV fell sharply in 1996-97.
This was despite a higher than stated allocation in debt instruments. The fund was heavily invested in small andmid-cap stocks which have witnessed an erosion in value. An open-end fund, the scheme is open for continuous sale and repurchase from February 1995 onwards. With its lacklustre performance, the fund has also faced redemption. Compared to the initial mobilisation of Rs 396 crore, the unit capital is currently down to Rs 188.5 crore. This only compounded the problem and forced the fund to sell its large equity holdings.
The fund has been actively churning its portfolio in the past one year. It has also raised exposure in equities from a low of 65.9 per cent as on March, 1996. Today the top exposure include PSU stocks which account for almost 39 per cent of the total equity exposure. As on March 2, 1998 five of the top six holdings are PSU stocks. The other top holdings include Hindalco, TISCO, GE Shipping, ACC and SBI. The top five holdings account for 39 per cent and the top ten holdings account for 54 per cent of the equity exposure. The result of portfolio churning is beginning to reflect in the fund'sperformance. In turbulent markets during the last one year, the fund has depreciated by just 2.1 per cent. The fund could emerge as a dark horse if there is a turnaround in the market.
