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Shanthi Venkataraman

PruICICI Discovery has performed impressively since its launch in July 2004. The fund seeks to invest in value stocks — those that trade at attractive valuations in terms of earnings or book value or on the basis of dividend yield.

The fund has turned in a return of about 50 per cent since its launch, beating the benchmark index by a wide margin.

The performance is better than that of other funds with a similar focus such as UTI Master Value, Tata Equity P/E and Birla Dividend Yield Plus over this period. Those who had invested in the initial offer of the fund can, therefore, retain their holdings.

Suitability: The portfolio comprises stocks that, on an average, trade at a price-earnings multiple of about 10 times.

While value stocks may not necessarily provide scope for significant appreciation, the downside risks tend to be limited.

With several mid-cap stocks now trading at valuations higher than their large-cap counterparts, the portfolio has a tilt towards large-cap stocks. PruICICI Discovery, therefore, comes with a lower risk profile than a fund focussing on mid-cap stocks.

Portfolio overview: There are 45 stocks in the portfolio . The top ten account for about 40 per cent of the entire holdings. Large-cap stocks such as SBI, PNB, ONGC and M&M figure in the top five holdings.

About 70 per cent of the assets are invested in stocks with a market capitalisation of more than Rs 2,000 crore.

The portfolio sports unconventional picks such as Gujarat State Fertilisers, Pidilite, Tata Investment Corporation and India Infoline.

Popular mid-cap and small-cap stocks such as Voltas, Indo Gulf Fertilisers, EID Parry, Thermax and Mastek also figure in its portfolio.

The portfolio is churned more aggressively than a typical diversified fund. This is to be expected, as the fund would have to include only those stocks that meet the valuation criteria in the portfolio.

Fund facts: The fund was launched in July 2004. It had an asset base of about Rs 350 crore as on May 2005.

Both dividend and growth options are on offer. The minimum investment amount is Rs 5,000. The NAV as on June 30 is Rs 15.02.

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