Morgan Stanley Reshuffles Portfolio, Nav Near Rs 10
Fund managers at the Morgan Stanley Growth Fund have a reason to be happy. The net asset value (NAV) of the fund now stands at Rs 9.50 per unit, and is soon expected to touch the psychologically important mark of Rs 10 per unit.
After reporting a negative return for nearly three years, a dedicated strategy for the past 18 months has resulted in the fund registering an improved NAV.
Says Akash Prakash, vice president of Morgan Stanley AMC, "We are fighting an emotional battle. There is pressure on us to perform. The performance has not been all that bad. We have pursued an extensive portfolio restructuring exercise for the past 18 months.''
The Morgan Stanley strategy involves two basic elements. First, they have reduced the number of holdings, and increased concentration levels in the portfolio to the point where the top 50 holdings now account for nearly 75 per cent of the total value of the fund.
Wesley Mcdade, executive director, Morgan Stanley Asia, who is based in Hong Kong, said that the fund is bullish on India, and would certainly be interested in expanding its activities.
"Before we take up anything else, we want to ensure that the existing fund performs well. The whole effort is to build up a credible performance," he said.
According to the annual report of the fund, the process of consolidation has taken time due to the poor market conditions over the past 24 months and the limitations of a paper-based settlement system.
The top ten stocks held by the fund includes Bhel (33.79 lakh shares worth Rs 98.85 crore), Container Corporation of India (20 lakh, Rs 86.06 crore), HDFC (2.42 lakh, Rs 66.65 crore), SBI (9.98 lakh, Rs 27.24 crore), Infosys Technologies ( 2.37 lakh, Rs 23.88 crore), MRF (44,350, Rs 12.88 crore), Sundaram Finance (4.32 lakh, Rs 13.32 crore), Asahi India Safety Glass (97,000, Rs 8.24 crore), Cipla (1.8 lakh, Rs 10.51 crore) and HDFC Bank (1.4 lakh, Rs 6.8 crore).
The fund has booked profits by selling its holding in some stocks while churning its portfolio. The holding in Telco, which was worth Rs 31.74 crore according to the 1995-96 annual report, has been brought down to a mere 289 shares worth Rs 98,260 . A similar strategy was adopted for some other key holdings of the fund.
Prakash sees greater polarisation in the Indian industry due to which the fund will focus on investing in companies that will benefit from liberalisation. "The emphasis will be on those companies that will concentrate on shareholder value creation," he added.
Investments in NDTV, TV 18
The fund had also subscribed for the private placement of media companies like New Delhi Television (NDTV) and Television Eighteen (TV 18) in the previous year. While there has been no sell off from the fund of these shares, the fair value as determined in good faith by Morgan Stanley AMC has gone down.
While the investment in the previous year in 1.48 lakh shares of NDTV is worth Rs 2 crore as per the annual report of 1995-96, it has been pegged at Rs 1.2 crore for the current year.
The investment in TV 18 was 1.50 lakh shares worth Rs 1.12 crore in 1995--96 which has now been pegged at Rs 49.75 lakh.