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Kothari Pioneer Infotech Fund

Dhirendra Kumar

The first Indian information technology fund -- Kothari Pioneer Infotech was launched in August 1998. Under the growth option, the fund gave a 1:1 bonus in January 2000. The dividend plan of the fund has paid three dividends - 40% in 1999, 60 per cent along with a bonus of 1:1 in January 2000 and another dividend of 60 per cent in March 2000. Entry into the fund is at a 2 per cent load while exit is at no-load.

FUND BASICS   Objective    Size (Cr)    NAV: 25/04/2001    Exit Price    Entry Price    Total Return   Growth   249.19   14.59   14.59   14.88   49.19%

Within its narrow investment basket, the fund scouts for companies, which have the ability to create long-term wealth by surviving through the worst of market phases. Thus, the fund has built a concentrated portfolio around top tier IT companies with top five stocks -- Infosys, Hughes Software, HCL Technologies, Satyam and Wipro accounting for an average 55 per cent of the corpus in the last trailing year.

The quality focus has been sustained with the fund staying away from speculative stocks despite phenomenal growth of corpus. However, the portfolio does hold a marginal exposure to small company stocks - while blue chip stocks provide steady returns, small companies rake in extra returns in times of a rally.

Benchmark Comparisons (%)      1M    3M    6M    1Yr    3Yr   Fund   -6.42   -42.62   -41.33   -57.10   -   BSE IT Index   -12.44   -49.55   -44.31   -64.16   -   S&P Nifty   -2.17   -13.81   -2.24   -18.78   -0.51   Obj. Avg.   -7.12   -38.38   -37.43   -54.42   -

The quality portfolio is matched by an impressive performance since launch with a return of 49 per cent. While an encore may or may not be possible, with the short-term outlook of the technology sector remaining uncertain, it does hold the potential to outpace the market in the long-term. However, like all technology investments, this return has not come without its share of volatility - the fund lost 57 per cent in line with its category average in the last trailing year ending . The losses have come despite an average 18% exposure cash, and highlights the volatility embedded in technology funds.

Kothari Pioneer Infotech is an ideal bet for targeted diversification given its strong quality orientation. However, the fund is suited only for the venturesome, contrarians and diehard believers in technology. For others, only periodic investment of a part of your long-term investment can yield performance and mitigate turbulence.

Top Holdings (30/03/2001)      Value (Cr)    % of Assets   Infosys Technologies   53.50   21.47   Hughes Software Systems   31.75   12.74   H C L Technologies   28.27   11.34   Satyam Computer Services   24.18   9.70   Wipro   15.05   6.04   Polaris Software Lab   11.77   4.72   NIIT   10.46   4.20   B F L Software   7.38   2.96   Wipro   7.32   2.94   Sonata Software   4.81   1.93   Digital Equipment (India)   4.18   1.68   Mastek   3.58   1.44   Mascot Systems   3.12   1.25   Planetasia.Com   1.18   0.48   P S I Data Systems   1.16   0.46

Source: Value Research

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