A follower of value investment strategy, like Templeton India Growth Fund, the fund has a huge exposure to infotech and pharmaceutical sector stocks. However, the two funds have very little in common in terms of their portfolios in spite of following a similar investment strategy.

The Templeton India Growth Fund has a marginal exposure to sectors like software and pharmaceuticals. The other difference between both the funds is that while Templeton is mainly invested in `Indian' stocks, Sun F&C has a major exposure to `multinational' stocks.

"We had invested in the market when it was at the 4,250 levels and now it is at 3,400 levels and as such the value should have actually depreciated by 25 per cent ie,the value of an investment of Rs 10 should have been Rs 7. The current value, however, is Rs 11.11. That means the fund has beaten the Sensex by 41 per cent," said Sun F&C Asset Management Company's chief investment officer, Gul Teckchandani.

The portfolio of Sun F&C has seen some changes for the quarter ended June 30, 1998, from the quarter ended March 31. The allocation to the software sector has increased from 22 per cent to 32 per cent of the total investment.Allocation to pharmaceuticals too has increased from 13 per cent to 15 per cent in this quarter, while the cash component has increased from 4 per cent to 12 per cent.

The portfolio still has an exposure of 8 per cent to personal care products, 7 per cent to refineries and another 7 per cent to banks among others.

"Sectors where the Indian industry is competitive globally or where consumer spending directly drives demand continue to do well. This is reflected in our portfolio, where we continue to remain invested in software, pharmaceuticalsand personal care products," said Sun F&C AMC's chief executive officer Nikhil Khattau.

The movement of the NAV of the fund in July shows that the portfolio is highly sensitive to the swings in the Sensex. On July 16 when the BSE Sensex was at 3,488 levels, the NAV of the fund was at a high of Rs 12.28 and when the Sensex was at 3,089 points on July 3, the scheme's NAV was down at Rs 10.41.

The portfolio investment shows that the performance of the scheme is skewed towards the infotech sector and if the holdings in the software sector are deleted, the fund may not have outperformed the Sensex to such an extent.

The Sensex comprises only one software scrip and the outperformance is therefore bound to occur. The investment strategy remains the same, of finding value in shares of companies which are selling at prices lower than their earnings potential and actual business value. Although the liquidity of such companies is low, investment in highly liquid companies provides the necessary liquidityrequired by the portfolio.

Meanwhile, the fund plans to shortly launch an open-ended dual option income fund with a liquid and bond option. The fund will invest in debt securities and money market instruments.

"Corporate earnings have grown by 16 per cent for 1997-98 despite a low 5 per cent growth in GDP. Though the commodity and capital goods sector are still reeling in the wake of an economic slowdown, we expect these to recover as the government undertakes infrastructure-related expenditure," added Khattau.