While the scheme is open-ended, it has a unique philosophy to limit fresh inflows. The fund protects the existing investors’ interest by restricting lump-sum investments. While the SIP mode is open across the year for investors; lump sum investment window opens at intervals and that too for a limited period only. So far it has opened only 5 times since inception – the recent being in May 2012.
On the portfolio side, the scheme generally never goes overboard on any particular sector. The exposure to any sector is limited to less than 10% with top five sectors at present being banks (9.55%), consumer foods (9.16%), brew/distilleries (7.25%), garments and fabrics (6.78%) and Logistics solution providers (6.57%). In case of volatility or market correction, the fund manager increases the cash position up to 20% as done in late 2011. Currently, the scheme has equity exposure of more than 90%.
Till date the fund has rewarded investors during bull-runs and shown tremendous resilience during bear-sentiments. On risk side, of the total 10 quarters when Mid & Small Cap Category has been in red, the scheme registered a lower fall than the category in nine. On the returns side, the scheme has outperformed the benchmark index as well as category average returns by a huge margin over 2, 3 and 5 year period as can be seen in the below table.
The fund definitely has the key-man risk with success largely depending on Andrade’s skills. However, despite the scheme belonging to Mid & Small Cap Category, it is less vulnerable to risk on account of judicious portfolio selection. Aggressive and moderately aggressive investors can consider this fund with a target investment period of at least 3-5 years. You can also consider SIP route for longer timeframe to ride out market volatility and average costs.