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Libra Leap

Dhirendra Kumar

Libra Leap, a five-year close-ended equity fund, was launched in May 1996 by HB Asset Management. It was converted into an open-ended fund on February 11, 2000. From November 1999, HB AMC merged with Creditcapital AMC. Consequently, now the fund is managed by the merged entity, Creditcapital AMC, the manager of Taurus Mutual Fund. Libra Leap would normally invest upto 85 per cent in equities. Entry in the fund carries a 2 per cent load while redemption is at net asset value (NAV). The fund paid a maiden 101 per cent dividend in March 2000.

Based on its current NAV, the fund has given a handsome return of 40.31 per cent annualised since its launch. As on May 6, 2000, fund has pared its exposure in Telecom to 26 per cent. Nevertheless, infotech, communication and entertainment component still aggregates to a whopping 63 per cent with an exposure of 28 per cent to software. The fund has quite a few second rung stocks as well. On going open-ended, the fund has seen fresh inflows with 2.4 million new units been issued.

The fund lacks a long performance track record as the fund closely tracked the market till June 1999 and most of the gain has come from its huge bets on few stocks. Interestingly, the fund's co-sponsor HB Portfolio owns 25 per cent of the outstanding units. Besides, the other equity funds of the family, Taurus Starshare, Taurus Discovery (earlier Newshare) and Taurus Genshare have proved to be a disastrous investment till recently. The funds have gained only in recent months in a rising market. The fund could deliver high returns but is an abnormally risky investment proposition.

Launched at a time when the markets were in a strong bear grip, the initial one and a half years saw the NAV plummet to a low of Rs 7.66 in December 1997. However, the fund started outperforming the Sensex since the beginning of 1998 and saw its fortune change with the market in October 1998. The fund gained 190 per cent in calendar 1999 as against a 58.8 per cent rise in the BSE Sensex. While no portfolio prior to March 1999 is available, it was a diversified fund in 1999 with holdings in software, telecom, textiles and pharma. But as the year wore on, the portfolio got increasingly skewed as a single stock, Himachal Futuristic, accounted for 51 per cent as on January 2000 which increased to 58 per cent in early March as the stock price rose. The high exposure to this one stock explains the further 60 per cent gain till February 2000. This made the fund a proxy of the stock, making the fund extremely vulnerable to any downturn in Himachal Futuristic. In the last 11 weeks, the fund was one of the worst hit losing 35 per cent of its gains.

Fund Basics
Objective	Size (Rs cr)	NAV:9/06/2000	Exit Price	Entry Price	Total Returns (%)
Growth	70.06 Cr.	21.80	21.80	22.24	40.31%
Benchmark Comparisons (%)					29/2/2000
	1M	3M	6M	1Yr	3Yr
Fund	6.4	-45.0	26.5	119.2	41.9
Sensex	2.7	-17.2	-5.5	13.2	5.4
Natex	-0.5	-34.5	-5.6	27.3	9.9
Obj. Avg.	2.0	-33.5	-6.0	41.7	19.8
Top Holdings (8/5/2000)					Net assets (%)
Himachal Futuristic					24.34
Zee Telefilms					8.47
Ram Informatics					5.69
Infosys Tech.					5.01
Ceat					4.44
N I I T					4.24
Orient Information Tech.					4.21
Punjab Anand Lamp Inds.					4.12
Jaiprakash Industries					3.91
Satyam Computer Services					3.09
Maral Overseas					2.85
MTNL					2.10
Nestle India					1.99
ACC					1.84
D S Q Software					1.83
Associated Infotech					1.77
Lupin Laboratories					1.76
Pentamedia Graphics					1.76
Raymond					1.45
Ranbaxy Laboratories					1.44

Source: Value Research

Fund File

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