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Fund Pick: Canbonus

Background

Canbonus, an equity fund launched in May 1991 was offered exclusively to the existing unit-holders of the Canbank Mutual Fund schemes. Launched as a closed-end fund with the earliest redemption in July 1,1999, was extended for a year and converted into an open-end fund in May 1999. The fund gave two bonus in its closed-end tenure, a 1:5 bonus in January 1994 and 1:4 in March 1996.

Performance

Canbonus in its over eight year history has given a total return of 9.25 percent, significantly lower than the market return of 16.95 per cent on the unmanaged BSE Sensex. For a long part of its tenure the fund lacked any focus, managed passively and was wildly diversified across over 100 stocks. In June 1998, the equity portfolio of the fund was spread over 118 stocks. Being passively managed a good part of the portfolio turned illiquid in the four-year bear phase till 1998. With the deterioration in portfolio quality the fall in NAV of the fund was almost always sharper than the market, and the fund was unable to participate handsomely in a rising market.

The fund portfolio has been consolidated in 56 stocks and top 10 holdings accounting for 51 perecent of net assets. Today, the fund is evenly diversified across sectors with overweight on few stocks - HLL (16%), Cipla (7%) and Punjab Tractors (6%). The largest sector allocation of the fund is FMCG stocks (23%), Infotech & Telecom (20.5%), Pharmaceutical (18%) and Automobiles (10%). With its portfolio revamp and a buoyant market the fund has stared participating in market swings, In a rising market in 1999 year-to-date the fund is up 53 percent.

Outlook

The fund is very actively managed now and increasing its position in cyclical stocks to strike a balance between cyclical and non-cyclical stocks. With its enhanced quality portfolio of large and mid cap stock orientation the fund performance looks sustainable. The fund has the potential to beat the benchmarks in a rising market owing to its active management. Canbonus is attractive for investors seeking steady returns from equities.

FUND BASICS
Objective	Size	NAV:22/10	Exit Price	Entry Price	Total Returns
Growth	83.84 Cr	13.96	13.96	14.10	9.36% pa
BENCHMARK COMPARISONS (%)					30/9/99
	1M	3M	6M	1Yr	3Yr
Fund	-1.3	21.7	22.8	48.5	11.8
Sensex	-2.9	15.1	27.4	53.6	12.9
Nat. Index	0.7	23.6	34.0	60.4	14.4
Obj. Avg.	3.7	24.7	23.6	50.2	11.2
TOP HOLDINGS (30/09/99)					Net Assets %
HLL					16.04
Cipla					7.39
Punjab Tractors					5.51
HPCL					3.76
Hoechst Marion					3.46
VSNL					3.13
SBK Consumer					3.01
Siemens					2.82
Hindalco					2.78
BHEL					2.73

Mutual Funds

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