Books
Columnists
Indian Tax
Insurance
Interview
Mutual Funds
NRI Tax
Personal Finance
Personal Banking
Real Estate
Stocks

Zurich India Capital Builder

Dhirendra Kumar

Zurich India Capital Builder (ZICB), earlier known as Zurich India Quantum Fund, was converted into an open-ended fund in January 31, 2000. The fund charges an entry load of 1.5 per cent, and the redemption is at net asset value (NAV). The fund has till date not declared any dividends. Launched before the 1994 boom, the fund lost heavily in the post-IPO boom. Hence, the fund's return since launch is a meagre 2.5 per cent.

The fund underwent a prolonged restructuring exercise aimed at trimming the size of the portfolio with a focus on industries with better potential and stocks with a strong position in its business. The fund assumed fresh positions in some of the frontline stocks in engineering, software, pharma and FMCG and saw a turnaround in the third quarter of 1997. The rise was sustained through the frantically rising markets of 1999 till February 2000.

On the completion of its tenure in January 2000, the fund lost 50 per cent of its asset base by way of redemption. At the time of going open-ended in mid-February 2000, because the FMCG and other sectors in which the fund had a large holding lagged behind the ICE sectors, its NAV slumped compared to its competitors. As a result, there were further redemptions and presently the fund's size is Rs 400 million. Zurich India Capital Builder Fund has been positioned as a conservative, long-term fund. The fund's prospectus recommends buying "strong companies at reasonable prices". In the booming market for IT stocks, the fund had a relatively small exposure (a maximum of 13.5 per cent in January 1999). And that too was pruned much before the ICE meltdown (down to 6 per cent by July 1999). The most important reason why the fund did not stay invested in IT stocks was the high valuations. However, the fund would certainly invest in technology stocks, but at price levels that they consider reasonable. The fund has recently bought NIIT again, after selling the stock at higher levels in January 2000. Today, the fund is well diversified across FMCG (36%), automobiles (22%), publishing (14%), pharma (11%), consumer durables (7%), hotels (4%) and engineering (3%). The fund is up 19.7 per cent over the past one-year ending April 30, 2000. In the recent market fall, the fund has fallen the least among diversified equity funds. ZICB's diversification has paid off now. Though the fund's returns don't stack up against its peers, given its well balanced portfolio strategy, the fund is likely to deliver above average returns with greater stability.

Fund Basics
Objective	Size (Rs cr)	NAV	Entry Price	Exit Price	Total Returns (%)
Growth	40.1	11.68	11.85	11.68	2.50%
Benchmark Comparisons (%)					30/4/2000
	1M	3M	6M	1Yr	3Yr
Fund	-6.5	-19.0	-9.6	19.7	25.2
Sensex	-9.7	-12.7	1.4	42.3	6.8
Nat. Index	-21.3	-18.9	11.0	68.5	13.5
Obj. Avg.	-23.4	-22.5	10.3	68.7	21.4
Top holdings (30/4/2000)					Net Asset (%)
Hindustan Lever					13.20
Macmillan India					8.4
Procter & Gamble					7.7
Pfizer					7.1
Himatsingka Seide					6.9
Hero Honda					6.4
Punjab Tractors					6.3
Colgate Palmolive					5.9
Tata Donnelley					5.6
Kodak India					4.1
Cipla					3.7
Thomas Cook					3.7
Nestle India					3.6
Telco					3.5
Cummins India					3.1
MICO					3.1
Swaraj Mazda					2.2
Indian Shaving Products					1.8
ITI					1.2
NIIT					1.1

Source: Value Research

Mutual Funds

Tell us what you think of this feature