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Suresh Krishnamurthy

INVESTORS in IL&FS Growth & Value Fund can continue to hold on to their units. The fund's performance in the last year has been impressive. Fresh investments in, or enhancing exposures to the fund need not be contemplated now.

The near-term performance of the fund has been largely influenced by the substantial rise in prices of mid-cap stocks leading to out performance of benchmark indices. Investors need to wait and see if the fund manager is able to sustain the out performance over the indices before parting with more money.

Moreover, the fund's performance in 2000 and 2001 were largely unimpressive. As such, it would be better to observe the fund's performance for another year or two before enhancing exposures.

Performance: The fund has notched up returns of about 40 per cent in the last 12 months. The performance is more in line with that of a mid-cap fund during this period and is much higher than that recorded by large-cap growth scheme peers.

The fund has also comfortably outperformed benchmark indices such as the S&P CNX 500 during the last 12 months. However, over a three-year period, the fund has generated annualised returns of only about 2.4 per cent.

Portfolio allocation: At the end of June 2003, the scheme had Rs 130 crore of funds under management. The cash position of the fund was about 10.4 per cent, which is on the high side.

Given the large run-up in prices during May-June 2003, the cash position of about 10 per cent may have dragged the performance down by about 0.5 percentage points. However, inflows had gone up sharply in June 2003 and may account for the higher cash position.

The exposure to mid-cap stocks remained high at the end of June 2003. Stocks of mid-cap companies accounted for nearly about 40 per cent of net assets. In terms of sectors, the top five exposures were banks, steel, healthcare, auto and petrochemicals.

These sectors accounted for nearly 53 per cent of net assets. In terms of stocks, the top five picks of the fund were HPCL, State Bank of India, Tata Steel, Ranbaxy Laboratories and ITC.

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