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Aarati Krishnan

INVESTORS in the Alliance Buy India Fund can pare exposures and switch to a diversified equity fund with a good track record. The fund invests in a mix of FMCG, pharma and media stocks. With the stocks in these sectors seldom moving in tandem, diffused focus has proved to be the fund's undoing. Over the past year, funds investing in FMCG stocks alone have lost around 15 per cent in value on an average, while pharma funds have lost around 9 per cent. But the Alliance Buy India Fund has lost around 16 per cent in value since December 2000, underperforming most of the sectoral funds investing wholly in FMCG or pharma stocks.

During September-December, the fund pared exposures to pharma stocks while retaining most of its FMCG and media exposures. The following changes were made in the portfolio between September 30 and November 29, 2001:

Stocks added: The fund did not add any new stock.

Stocks sold out: The fund completely sold holdings in Zee Telefilms, Smithkline Beecham Pharmaceuticals, Excel Industries and Archies Greetings.

Exposures pared: The fund appears to have used the run up in pharma stocks to book profits in quite a few of them.

Dr.Reddy's Labs, Cipla, Glaxo and Wyeth Lederle were the key holdings where the fund pared exposures.

Exposures enhanced: The fund added significantly to its holdings in ITC, Apollo Hospitals and Balaji Telefilms.

Sectoral shift: The exposure to pharma stocks fell sharply during the period, from 49.1 to 43.3 per cent of the net assets. But pharma remained the fund's largest sectoral allocation by end of November 2001. The exposure to foods/beverage stocks saw a slight increase in allocation from 27.3 to 28.5 per cent. Media stocks accounted for around 5.2 per cent of the assets by end of November, and consumer/personal care stocks for 5.6 per cent.

The fund appears to have retained the major portion of the profits obtained on pharma stocks in the form of cash. The exposure to cash and money market instruments climbed from 5 per cent in September to around 11 per cent by end of November.

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