The Hindu Business Line : PruICICI Emerging S.T.A.R

PruICICI Emerging S.T.A.R (Stocks Targeted At Returns) Fund was launched in October 2004 with a strategy to invest predominantly in companies with market capitalisation between Rs 100 crore and Rs 2,000 crore. While a few funds view mid- and small-cap stocks as momentum plays, this fund appears to adopt a buy-and-hold strategy on such stocks.

About 37 per cent of the assets are invested in stocks with market capitalisation above Rs 2000 crore. The fund has a well-diversified portfolio of 58 stocks across 18 sectors. The top ten stocks accounted for 30 per cent of the total assets. During the quarter ended January 2007, the fund stepped up exposure to sectors such as IT, capital goods, media and entertainment, construction and banks. It pruned holdings in cement, auto ancillaries, consumer non-durables, pharma and transport.

In the software space, the fund pruned stocks such as Mastek, Mphasis and Tech Mahindra, adding, instead, 3i Infotech and Prithvi Information Solutions. It also accumulated shares of Mega Soft.

Capital goods saw increased asset allocation in the portfolio even as the fund stepped up holdings in Bharat Bijlee, RPG Transmission and Stone India. Aban Lloyd Chiles was the lone stock that underwent trimming.

Media and entertainment attracted the attention of a number of fund-houses and this scheme was no exception. Exposure to Jagran Prakashan and Prime Focus were enhanced.

It appears that construction stocks, which had a dream run, are running out of steam as a number of them are under selling pressure, seemingly on the back of increase in mortgage rates. The fund, however, took a contrary view, and trebled exposure to Ansal Properties & Infrastructure, though it pruned Patel Engineering and Gayatri Projects.

It trimmed exposure to cement with exits from Chettinad Cements, Century Textiles, Hyderabad Industries and OCL India. Birla Corporation was, however, was accumulated. Triveni Engineering and Industries was the only stock to represent the consumer non-durables space after Mirza International and Uttam Sugars moved out of the portfolio. Mr Deven Sangoi manages the fund, which had an asset size of Rs 1,246 crore as of January 2007.

Suresh Parthasarathy

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