The fund manager of Morgan Stanley attributes it to portfolio restructuring exercise initiated in 1996. "The number of stocks in the portfolio has significantly reduced to improve performance. Marginal positions have been weeded out, while simultaneously ensuring that the consolidation process provides adequate risk diversification," said the executive director of Morgan Stanley Asset Management, Akash Prakash.

The mutual fund has been consistently underperforming since inception in 1994 when it garnered Rs 875 crore from the investors. However, the fund being close-ended did not see much capital flight. The fund has, however, changed its strategy and now invested in 100 stocks compared with 250 earlier.

"We will launch more schemes and look at otheravenues only after our investors have had the feel of their appreciation in value and there is some amount of confidence inculcated in the mutual fund," added Prakash.

The year ended balance sheet as on March 31, 1998 shows a churning in the holdings of the portfolio. The top 25 holdings of MSGF account for 80.90 per cent of the portfolio. The annual report of the mutual fund shows the chage in stock preference to inclusion of stocks like Hero Honda, NIIT, Cummins India, Wyeth Ledrerle, Software solutions, Bata India, Tata Infotech and Essel Packaging in the top 25 holdings.

Last fiscal, the top 25 formed 58.5 per cent of the portfolio, while this year these form 80.90 per cent of the portfolio. This clearly shows the investment philosophy. "We continue to lay emphasis on the quality of management teams, ethical management, non-dilutive nature and growth oriented companies" added Prakash. "The NAV of MSGF since inception has appreciated by 4.5 per cent against a 14.98 per cent fall in the BSE-200 and a25.78 per cent decrease in the Crisil 500," said Prakash. The NAV of the fund has substantially increased since March 31 reflecting the fact that the fund managers are actively managing the portfolio now.