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Vipul Mehrotra
Morgan Stanley Growth Fund (MSGF) seeks long-term capital appreciation through investment primarily in equities. Dividend payout is secondary and the fund will normally reinvest realised gains and income.
Normally, at least 70 per cent of assets will be in equities. The fund at its launch was able to create a hype and confusion with an indication of limited supply with its `first come first served' clause. Courtesy the clause, MSGF raised Rs 980 crore against a target of Rs 300 crore.
Liquidity is available through listing at major stock exchanges. Akash Prakash and Ashutosh Sinha manage the fund. Earlier, the fund was managed by Prakash and Kaushik Poddar.
Till date, MSGF has been an absolute non-performer. In four and a half years since launch, the fund has not even managed to guard the investment in terms of its NAV performance. In terms of the stock performance, the original investment has depreciated by around 40 per cent.
MSGF's massive raise proved to be a constraint, inhibiting it to perform. Morgan Stanley Growth Fund (MSGF) seeks long-term capital appreciation through investment primarily in equities. Dividend payout is secondary and the fund will normally reinvest realised gains and income.
Normally, at least 70 per cent of assets will be in equities. The fund at its launch was able to create a hype and confusion with an indication of limited supply with its `first come first served' clause. Courtesy the clause, MSGF raised Rs 980 crore against a target of Rs 300 crore.
Liquidity is available through listing at major stock exchanges. Akash Prakash and Ashutosh Sinha manage the fund. Earlier, the fund was managed by Prakash and Kaushik Poddar.
Till date, MSGF has been an absolute non-performer. In four and a half years since launch, the fund has not even managed to guard the investment in terms of its NAV performance. In terms of the stock performance, the original investment has depreciated by around 40 per cent.
MSGF's massive raise proved to be a constraint, inhibiting it to perform.As the fund was to have a mid-cap orientation, there were not enough opportunities for deployment of nearly Rs 1000 crore. Hence, it has trailed behind market averages and its peers.
Despite being fortunate with its big bets like SBI, BHEL, Container Corporation, Infosys Hero Honda and MTNL, the non-performance of its widely spread portfolio ate into its gains on its big bets.
The mid-cap stocks have lost heavily as compared to heavy weighted index in the market decline since September, 1994. Over the past two years, the fund has implemented a restructuring excise aimed at increasing concentration in key bets while reducing its number of holdings.
The top twenty five holdings today account for around 80 per cent of the portfolio. In March 1996, the corresponding figure was 42.17 per cent.
The fund has more or less marginalised its small and mid cap holdings. Most of the illiquid stocks wee sold at a loss. Over the past three years, the fund has booked a loss of over Rs 250 crore. To an extent, thefund has shored its value through market buy-back of its units which trade at a steep discount to NAV.
The fund's NAV has gained in the recent past. It was the top performing closed-end growth fund in the quarter ending May 31, 1998 and has consistently been among the top ten performers during most of 1997-98. But its market price has been more or less constant at around Rs 6.
The problem with Morgan Stanley is that its name has become generic with all that is wrong with the fund industry.
At its present discount, Morgan Stanley Growth fund looks tempting but the discount is likely to prevail unless their is a change in the investor perception.
Never the less, the post restructuring MSGF should appeal to investors with a fairly long term horizon. One can be a winner with a modest periodic investment in MSGF, with its redemption 11 years away.
Value Research
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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