Alliance '95 scales exposure to IT sector; bullish on banking segment
Alliance '95 has been the top performing balanced fund in 1997. The fund's NAV has appreciated from Rs 9.02 at the end of 1996 to Rs 13.49 on December, 31, 1997, a gain of around 50 per cent. This is more than any open-end fund in any category.Alliance '95, an open-end balanced fund seeks long-term capital appreciation and current income from a portfolio of equity and fixed-income securities. Usually the fund invests upto 60 per cent of its net assets into equities and holds the balance in investment grade bonds and money market instruments. The fund distributes over 90 per cent of its profits as annual or interim dividend. The fund declared its maiden dividend of Rs 0.43 in July, 1996 and did not make any pay out in 1997. Samir C. Arora joined Alliance Capital in New York in 1991 and has been the fund manger of Alliance '95 since its launch. Launched in February, 1997, Alliance '95 struggled for two years to stay around the par value of Rs 10. In turbulent equity market, the fund was continuously
combating redemptions, which brought the outstanding unit capital from Rs 71 crore in February, 1995 to Rs 35.8 crore in March, 1997. Till March, 1997, although the fund had not given any significant return since its launch, nevertheless, it had outperformed its benchmarks over most time periods. The initial non-performance can also be attributed to the fall of then booming IPO market, where the fund was initially active. Since March 31, 1997, the fund has witnessed a remarkable turnaround in performance. In six months, the NAV appreciated by 49 per cent to touch a high of Rs 14.58 on September 9. The rally was mainly driven by infotech stocks where the fund was among the first to take an aggressive stance. As on September 30, as much as 38.31 per cent of the fund was invested in the four infotech stocks of Digital, Infosys, Mastek and Satyam. The infotech stocks accounted for over 50 per cent of the funds equity exposure. The fund has started decreasing exposure to infotech sector. Alliance has
disinvested heavily in Infosys and Satyam (at a reported profit of 450 per cent) in the quarter ended December, 31. Although the fund has included NIIT, the infotech exposure is now down to 30.39 per cent. The fund now seems to be betting on the banking sector. Despite major dis-investments in SBI and BoB, during the quarter Alliance has increased exposure in the sector from 6.31 per cent to 10.09 per cent. The new additions include Corporation Bank and ICICI Bank while the fund has increased exposure in HDFC Bank. SBI was the sixth highest exposure on September, 1997, while Corporation bank is among the top five holdings today. The fixed-return portfolio of the fund is mainly into reasonable credit quality privately placed debentures. Unlike other funds, Alliance '95 has been relatively diligent (despite smart rally by its equity holdings) in following a balanced asset allocation. During 1997, Alliance '95 brought down its entry load from 6 per cent to 2.25 per cent. Value Research
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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