Over the past month, Kothari Prima, a growth fund from the Kothari Pioneer stable has bucked the trend of a fall in net asset values. Since October 21, while the market averages have fallen around 16 per cent, NAVs of majority of pure growth funds have shed between 7-16 per cent. However, coming as an aberration, Prima has appreciated by 3.31 per cent.

The first open-end growth fund, Prima seeks `aggressive growth'. The fund aims to achieve its objective through equity investments in high growth companies in new and emerging industries, start-up ventures, small-cap niche players and low-profile solid stocks. Ravi Mehrotra is the chief investment officer of Kothari Pioneer Asset Management Company.

As per its last disclosure ( May, 1997) the fund had a 83 per cent exposure in equities. Of this, around 26 per cent was in Bluechip large cap stocks, 8 per cent in value stocks and 66 per cent in small and mid-cap stocks. The fund had a 6 per cent exposure in debt.

Launched before the 1993-95 IPO boom, the fund pioneered the IPO arbitrage strategy of getting firm allotments in IPOs and selling at a higher price on listing. The fund's NAV touched Rs 20 within a year of launch. But with the IPO boom going bust, the fund was saddled with ill-liquid small cap stocks. The latest NAV of the fund is Rs 8.73. The fund has faced heavy redemption, with its capital down to Rs 32 crore from Rs 176 crore in March, 1995.

After literally starting afresh in Bluechip and Prima Plus, Kothari Pioneer AMC seems to be working over time. In a communication to its investors in May, the AMC had tried to de-link its past performance from future potential of its funds.

After around two years of continuous fall, Bluechip and Prima Plus have been among the top performing growth funds in the first half of the current fiscal.

Over the past few months, Prima has been offloading equity holdings. A large portion was offloaded on a single day (October 20) at a loss when the Sensex rose by around 50 points but the fund fell by around 11 per cent. The fund is currently more or less fully in cash and has been able to guard its value. Investing at lower levels should give the fund a head start when the market rebounds. Unlike its past, the fund is unlikely to be as aggressive and reckless in its portfolio building exercise this time around. Moreover, if the turnaround is Bluechip and Prima Plus is any indicator, Prima seems to be coming out of its agonising past.

Prima is worth a closer look although the investment decision could be taken only when the fund declares its latest portfolio. The fund carries an entry load of 3 per cent.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.