The asset management company expects its equity schemes to put up a good performance in the medium to long term although there could be some ups and downs on account of economic sanctions and FIIs fleeing due to the Asian crisis.

However, the AMC had to combat redemptions in two of its three open-end equity schemes in 1997-98 - Prima and Prima Plus. The unit capital of Prima dropped from Rs 31.67 crore on March 31, 1997 to Rs 16.74 crore for 1998 (a hefty redemption of 47 per cent). This could be one reason for the negative growth in NAV since Primahad to liquidate its holdings at a time when it was consolidating its portfolio.

Since the fund had a large exposure to illiquid and small-cap stocks, it would have forced Prima to dispose off some of its better investments to meet redemption commitments. In the case of Prima Plus, the unit capital reduced by 14 per cent from Rs 102.42 crore to Rs 88.16 crore in the same period. Bluechip, on the other hand, witnessed a small net inflow with its unit capital rising from Rs 4.39 crore to Rs 5.27 crore. Bluechip saw its NAV appreciate by 55 per cent during 1997-98 against the sensex gain of 15.21 per cent. According to the review, the NAV has appreciated on account of investments in non-cyclical and growth sectors like software and telecom. Besides, the fund invested in fewer companies, which helped enhance average exposure. The fund also concentrated its resources on strong large-caps. For the current year, the fund managers of Bluechip plan to stick to non-cyclical sectors till the policy initiatives providethe impetus to economic growth.

The fund continues to invest in sectors like software since it is globally competitive and growing at 50 per cent year-on-year. ``Current valuations are still to factor in this phenomenal growth,'' says the report. Telecom sector is again a steady growth sector which is expected to remain unaffected by any downturn in the economy. In the case of pharma companies, MNCs will benefit on account of restructuring and patent protection post-2002 and the sector is poised for a leap after three years of restructuring. The restructuring of Prima, with investments in mid/small-cap stocks is more or less complete.

According to the report, the fund's policy regarding valuation of illiquid, small-cap stocks had an adverse impact on the NAV and hence, it declined by 6.53 per cent against an appreciation of 11.7 per cent of its benckmark, Crisil 500.

The fund is currently spread across 150 stocks but top 20 account for around 70 per cent of the total assets.

During the current year,the fund plans to invest in undervalued turnaround stocks, mid-cap stocks in sectors like pharma and software, special situation stocks like takeover/merger targets, restructuring, etc. In the current year, the fund has appreciated by 23 per cent between April 1 and May 20 against Crisil's gain of 4.32 per cent.

For Prima Plus, an extensive restructuring exercise was carried out during the beginning of 1997. The top 20 holdings currently account for 70 per cent of the assets. The fund also plans to stay weighted in IT, petroleum, telecom and FMCG sectors. It also plans to adopt the value investment strategy and invest in companies which are currently out-of-favour.