An outperformer in both bull and bear phases

Launched in October 2007, Fidelity India Growth Fund is a diversified equity fund with a tilt towards large-cap stocks. As of June, the fund had Rs 408 crore in assets. The large-cap bias of the fund is clearly visible with over 55 per cent being invested in S&P CNX Nifty stocks over the past two years. The fund is ranked ‘Crisil Fund Rank 1’ since the time it became eligible for Crisil’s Mutual Fund Ranking (the three quarters till June this year).

Performance
Fidelity India Growth Fund is among the few funds to consistently outperform its peers, especially in the period which saw the market in great turmoil. The fund’s 33 months’ existence included a 15-month bear phase wherein the markets slipped by over 60 per cent. During 2008 (the bear run), an analysis of the fund’s month-on-month performance vis-à-vis its benchmark index (BSE 200) reveals that, in nine out of twelve months, the fund gave higher returns.

When the markets recovered, the fund returned 145 per cent in absolute terms from the lowest point in March 2009 compared to the benchmark index which returned 137 per cent till date. Over a two-year period ended July 29, 2010, the fund posted an annual growth rate of over 27 per cent vis-à-vis 17 per cent and 18 per cent of the BSE 200 and the peer set, respectively, over the same period.

The fund’s performance has outshone the index during the life of the fund. In absolute terms, an investment of Rs 10,000 in the fund at the time of its launch (October 2007) would have grown to Rs 11,860 as of July 29 this year, vis-à-vis its peer set which, on an average, would have appreciated to Rs 11,050.

Performance analysis
Active cash calls across various market phases is an important aspect of Fidelity India Growth Fund’s investment style. By following this strategy, the fund benefited when markets were going through a bear phase. For most of 2008, when equity markets were volatile, the fund had around 10 per cent of assets in cash and equivalents, which came down to less than a per cent in the portfolio as of May this year. Further, Fidelity India Growth Fund’s equity exposures are also relatively higher compared to peers whose equity investment varied from 73 per cent to 96 per cent during this period.

Since its inception, banking has been the most preferred sector for the fund with an average exposure of around 16 per cent over this period. This reflects the fund manager’s view on the long-term potential of the sector. Information technology (IT) and refineries/OMCs followed with average exposures of seven per cent and 6.6 per cent, respectively, over the same period.

During the last two years, banks, pharma and IT were the biggest contributors to the total gains of the fund. Telecom and steel negatively impacted the overall gains during this period.

— Crisil Fund Services