Mutual Fund - ABN Amro Equity Fund : Analysis

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Investors can retain their holdings in ABN AMRO Equity Fund. The fund has set an impressive pace of performance since launch three years ago. The annualised return of 53 per cent has outpaced the benchmark Nifty by ten percentage points. Investors may consider the fund for their core portfolio once it builds a track record across a complete market cycle.

Suitability: The fund is suitable for aggressive investors. Over the past one year, the fund's portfolio has been churned aggressively. On average, at least seven new stocks were added every month, over the year.

The fund invests actively outside its benchmark, holding close to 50 per cent of its portfolio in stocks outside the Nifty. Investors who prefer to take exposure to a flexi-cap fund can consider this one as a diversification option. The fund recently witnessed a change in fund manager, which also may call for a wait and watch attitude.

Performance: Over a one-year period, the fund's NAV has grown by 73 per cent, outperforming its benchmark by 16 percentage points. On a year-to-year basis, the fund outpaced its benchmark in two out of the past three years, slipping up in 2006. It has consistently outpaced the category average over this time frame. The fund's asset base has also been quite volatile in this period.

Assets stood at Rs 350 crore during November 2006 but when the markets underwent a correction in February 2007, the fund appears to have witnessed redemption pressures and the assets in March 2007 stood at Rs 145 crore. The fund has, however, seen fresh inflows in the past year, with the asset base growing to Rs 350 crore in September 2007. Recent months have again seen outflows from the fund.

Portfolio: The fund has a compact portfolio, consisting of 40 stocks. Petroleum, construction and banks were the preferred sectors in the latest portfolio.

The fund was underweight in the market-favoured sectors such as capital goods and power stocks in the past one year. IT stocks too saw exposure brought down substantially in the past six months. Exposure to any single stock was restricted to less than 10 per cent of the assets. Mr Amit Nigam manages the fund. The NAV per unit is Rs 48.12.