Kothari Pioneer Pension Plan: Invest

Recommendation: Invest

Aarati Krishnan

KOTHARI Pioneer Pension Plan has turned in a reasonable performance after being restructured as a balanced fund last year.

The fund followed up a 16 per cent return in 1999 with a 10 per cent return in 2000. Though the 10 per cent return may not appear impressive, it must be seen in light of the 21 per cent decline in the broad equity market over the year. Kothari Pension Plan is one of the few balanced funds to manage positive returns over 2000. Investment in the plan carries a tax rebate under Section 88 and is a good investment option for long-term savings.

The Pension Plan is one of the more conservative balanced funds in operation. It maintains an equity exposure of just over 35 per cent, with the balance in debt and cash equivalents. The following changes were made in the portfolio between October 31 and November 30, 2000:

Exposures enhanced: Technology stocks make up the largest component of the equity portfolio of the Pension Plan. The fund stepped up exposures to the sector from 10.8 per cent to 13.4 per cent over November.

In the equity portfolio, the fund added to its holdings in Infosys (200 shares), HCL Technologies (10,000 shares), Grasim (10,000 shares), and Cummins (41,000 shares). In the debt portfolio, bonds of Larsen and Toubro and Associated Finance were added.

Exposures added: GAIL was the sole new entrant to the equity portfolio. The fund has bought 50,000 shares of GAIL during the month, accounting for 1.7 per cent of net assets.

Exposures trimmed: The fund has entirely exited its equity holdings in Cadila Healthcare and Britannia Industries over the month. In the debt portfolio, triple-A rated bonds from Ford exited the portfolio.

Asset allocation: The fund's exposure to debt barely changed between October and November 2000, from 55.69 per cent to 55.58 per cent. However, the fund used some of its free cash to invest in equities. Its allocation to cash fell from 14 per cent in October to around 9 per cent in November. The equity exposure climbed from 30 per cent to 36 per cent.

Fund facts: The Pension Plan is an open-end fund which carries neither entry nor exit load. The fund has distributed dividends of 12 per cent in each of the past three years on its dividend option.

This column tracks recent changes in the top exposures of various mutual funds. The latest available portfolio is compared with that of the preceding month/quarter.