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Alliance Equity

Dhirendra Kumar

Alliance Equity Fund, the aggressive growth fund of Alliance Capital has been a blockbuster in its brief history. The 100 per cent equity fund was launched following the impressive performance of its all equity Tax Saving Fund - Alliance Capital Tax Relief '96 and Alliance '95 (Balanced-70 per cent equity and 30 per cent debt). The fund, launched in August '98, had mobilised Rs 16 crores in its initial offer period. As on May 31, the fund had a size of Rs 515 crore. In fiscal 2000, the fund paid a total dividend of 80 per cent or Rs 8 per unit. Entry into the fund carries a load of 1.75 per cent.

Alliance Equity has gained handsomely in a brief period of little less than two years. Since its launch, the fund has given an annualised return of 115 per cent, handsomely outperforming BSE Sensex by 87 per cent. For one year period ending May 31, 2000 the fund has returned 114 per cent and ranks #1 among 39 open-end diversified equity funds. Alliance Equity has been able to achieve these returns with its concentrated bets. The fund started off with concentrated exposure to infotech, pharma and consumer stocks but moved to telecom and media stocks in late 1999 by paring exposure to pharma and FMCG stocks. As on May 31, 2000, the ICE sector accounts for a whopping 67.4 per cent of the total portfolio, which makes it a proxy of a technology fund. Among other sectors, the fund has exposure to pharma, financial institutions, auto, FMCG and cement. The fund's portfolio is concentrated with the top 10 stocks accounting for 64.6 per cent of the total portfolio.

Alliance Equity has so far been successful with its investment style of taking large bets and restricting exposure to high growth sectors. The fund has been nimble footed with a high portfolio turnover. However, the fund's size could be a constraint with its active portfolio management strategy as it grows in size. In the last three months, the fund has lost 38 per cent and ranks 33 among 43 open-end equity funds. Besides, since the AMC now owns a fund dedicated to the technology sector. Hence, it needs to prune the ICE exposure in Alliance Equity to reasonable limits. Else, the fund will continue to be volatile.

Fund Basics
Objective	Size (Rs cr)	NAV:14/6	Exit Price	Entry Price	Total Returns (%)
Growth	515.1	39.63	39.63	40.34	115.15%
Benchmark Comparisons (%)					9/6/2000
	1M	3M	6M	1Yr	3Yr
Fund	-3.9	-38.9	16.3	138.2	N.A.
Sensex	6.1	-10.8	-1.2	17.0	7.2
Natex	3.1	-26.5	-1.9	32.7	12.3
Obj. Avg.	1.0	-26.3	-4.8	47.6	21.9
Top Holdings (31/5/2000)					Net assets (%)
Infosys Technologies					12.80
Satyam Computer Services					10.70
Himachal Futuristic Communications					9.60
Global Tele-Systems					5.90
Zee Telefilms					5.90
Software Solutions Integrated					5.80
HDFC Bank					4.40
HCL Technologies					4.20
Digital Equipment (India)					3.50
Dr. Reddy's Laboratories					2.10

Source: Value Research

Fund File

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