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Fund Pick: Birla IT Fund

Background

Birla IT Fund (earlier Apple Platinum) was launched in January 1995 as a diversified equity fund. Following the decision of the promoters of Apple AMC to de-emphasise the financial services business, the management of the fund has been acquired by Birla Sun Life AMC which has changed the fund focus as an IT fund which will invest only in software stocks.

Performance

Apple Platinum followed the strategy of aggressive participation in the IPOs and selling at higher price on listing. But by the time the fund hit the road, the IPO game was over. With the IPO boom going bust, the fund was saddled with a number of junk stocks. The decline in the indices till Dec 1996 led to a more pronounced meltdown in the fund that lost more than 50 per cent of the face value. However, the last quarter of 1996 witnessed a total revamp in the fund. It dumped the IPO stocks and took aggressive positions in infotech, pharma and FMCG stocks. The revamp led to a significant improvement in performance giving the fund a gain of 87 per cent between December 1996 and April 1998.

Though the fund has outperformed the broad market from the beginning of 1997, it crossed the mark of Rs 10 only in March 1999. Riding the boom in these sectors, the fund has gained 435 per cent in the three years and 237 per cent for the year ending December 1999.

The fund is now being reoriented as a focused infotech fund. As on December 24, 1999, before the realignment of the portfolio in lines of a sector fund, software and FMCG stocks accounted for 47 per cent each with Hindustan Lever as the only stock representing the FMCG sector.

Outlook

Considering the track record of the funds of the Birla Sun Life AMC, the takeover will only benefit the fund. However, the changed focus on IT stocks will add to the fund's volatility. The fund is being offered at no entry load till January 30, 2000 but will charge an exit load of 1.5 per cent for redemptions before two years. The fund offers an opportunity for short-term gains with the declaration of a 25 per cent tax-free dividend for investors as on February 4th, 2000.

FUND BASICS
Objective	Size	NAV:10/1/2000	Exit Price	Entry Price	Tot Ret
Sector Fund	40 Cr	25.62	25.62	25.62	20.8%
BENCHMARK  COMPARISONS (%)					30/12/99
	1M	3M	6M	1Yr	3Yr
Fund	25.8	62.2	132.2	237.4	74.9
Sensex	8.3	5.1	20.9	63.8	53.5
Nat. Index	16.5	18.6	46.6	93.1	N.A.
Obj. Avg.	20.5	32.9	51.6	84.0	11.7
Top Holdings (24/12/99)			Mkt.Val(cr.)		Net Asts (%)
Hindustan Lever Ltd.			17.27		47.29
Satyam Computer  Services Ltd.			6.97		19.09
Mastek Ltd.			3.46		9.47
N I I T Ltd.			2.61		7.15
Infosys Technologies Ltd.			2.06		5.64
Hoechst Marion Roussel  Ltd.			1.24		3.40
Aptech Ltd.			0.97		2.66
Leading Edge Systems  Ltd.			0.86		2.35
D S Q Software Ltd.			0.25		0.68
Wartsila Diesel India Ltd.			0.21		0.58
Exide Industries Ltd.			0.20		0.55
Hindustan Petroleum  Corpn. Ltd.			0.17		0.47
Kvaerner Cementation Ltd			0.11		0.30
Others			0.14		0.38

Mutual Funds

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