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Aarati Krishnan

PRINCIPAL Resurgent India Equity Fund, formerly known as the Sun F&C Resurgent India Equity Fund, has a performance record that stacks up well against top performing equity funds such as Franklin Bluechip and HDFC Equity Fund.

Launched just after the tech stock crash of 2000, its performance has been impressive vis-à-vis the indices as well as its peers. Its performance needs to be watched closely because of the recent change in its management.

The fund has recently been taken over by Principal Mutual Fund that has lead to a change in a change in its fund manager and a few features. In this backdrop, fresh investment need not be considered.

Suitability: Principal Resurgent India Equity Fund is suitable for investors who are comfortable with above-average risks. The risks associated are higher as compared to typical diversified funds.

The fund specifically focusses on investment opportunities arising from turnarounds, restructuring or acquisition moves. This strategy may deliver high returns; such an approach brings with it the possibility of volatile returns. It also relies on the fund manager's ability to spot such candidates before the market does.

Performance: Launched after the tech stock crash was well underway, the Resurgent India Equity Fund got through the bear phase of 2000, relatively unharmed. The fund managed a small positive return in 2000 and fared much better than the majority of equity funds in 2001, recording only a small fall in its NAV.

Its performance in 2002 and 2003 was equally impressive, with the fund easily outpacing the indices and remaining in the top quartile of equity funds, ranked by returns.

The recent change in the fund's ownership and management may, however, have rendered this track record irrelevant to an extent. On taking over the fund, Principal has retained its investment objective, and reduced its minimum investment limit. It has also commenced public disclosure of the portfolio, which was not available earlier.

These moves appear to be positive for the fund. Given the fund's tiny size, at Rs 3.20 crore, any additional inflows could only help improve fund management. The lower minimum investment of Rs 5,000 may also help broadbase its investor base. Given the fund's specialised investment style and heavy reliance on the fund manager's skills, it may be better to watch its performance for at least a year, before adding it to your portfolio.

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