Thanks to its liberal definition of "core sector", it holds stocks in the engineering, technology, automobiles, metals and oil and gas sectors.

A diversified equity fund may be in a good position to capitalise on a further uptrend in broad market levels over the next three years.

But, as profit-booking based on target returns may be a good wealth accumulation strategy, even for long-term investors, even such investors can consider booking profits on some of their holdings in this fund.

Portfolio review: The following aspects of the fund's portfolio strategy become clear from the changes in its portfolio over the past year:

The portfolio strategy revolves around overweight positions in two or three sectors at a time. But the fund has gradually acquired a more diversified character over the past year. Software and engineering, the top two sectors in the portfolio in December 2002 accounted for nearly 44 per cent of its assets at the time.

But over the past six months, the fund has been spreading its portfolio over three or four key sectors, rather than just one or two.

By August 2003, engineering and metals/mining were the top sectoral exposures, but these accounted for just over 33 per cent of the assets.

The fund's good performance in the recent times appears to be on account of a focus on economically-sensitive sectors such as capital goods, construction, automobiles and metals.

Being a fairly early entrant to some of these sectors, the fund benefited from the sharp upward re-rating of such stocks on the back of reviving industrial growth numbers.

That the fund had restricted exposures to "growth" stocks in the large-cap IT and pharma stocks (it almost completely avoided FMCGs) has also helped.

The latter have under-performed economically-sensitive stocks over the past few months on account of their high relative valuations. Unlike most other equity funds, engineering rather than banking stocks, have determined PruICICI Power's performance.

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