Apple Platinum's (an open-end growth scheme) corpus has been eroded by 45 per cent over the past two years since its launch. Initially, the fund followed the stated strategy with aggressive participation in IPOs and Sell-on-Listing. The strategy not only proved unprofitable, but also saw illiquid junk stocks entering into the fund's portfolio.

The fund underwent a total revamp with rapid-fire moves of the new fund manager in October 1996. Over the past six months, the fund manager has sold most of the fund's IPO positions. However, he has been unable to get rid of some, which account for nearly 15 per cent of the equity portfolio.The initial investment strategy of the fund was meant to take advantage of the Sell-On-Listing strategy pioneered by Kothari Pioneer.

Unfortunately for Apple Platinum, by the time it hit the market, the primary market had lost its sheen for investors who suffered heavily at the hands of fly-by-night operators. The post MS Shoes IPO market saw the fund make a series of untidy stock selections which resulted in major losses. The investor response was swift and ruthless. Within one year the unit capital of the fund depleted by half.

Subsequent to the new fund manager taking over, there has been a complete portfolio revamp. The focus has shifted towards large cap stocks in the secondary market. Investment focus has shifted from finance companies, aquaculture etc to information technology, power equipment and pharmaceuticals. Although the portfolio outlook has improved subsequent to the revamp, the ravaged fund is too small to achieve proper diversification.Though evidence suggest that the fund manager knows what he is doing, a major uptrend performance is unlikely with out fresh capital inflow. Investors should delay new commitments.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.