With a performance graph closely tracking the benchmark BSE IT Index, Alliance New Millennium bears testimony to the dizzying heights and scary downfalls of the technology stocks.
Despite a deep bath, the fund manager remains a strong believer in technology stocks for their growth potential. But shows a clear preference limited to the top rung technology stocks. Today, these stocks account for 75 per cent of the portfolio.
Launched in January 2000, Alliance New Millennium seeks capital growth with focus on technology and technology dependent companies. And the fund was quickly deployed fully in a wide assortment of technology and media stocks off all kind. This was shortly followed by strong market's distaste for technology and media stocks, leading to its sharp fall to Rs. 2.88 now (as on 1/11/01).
With a shrinking asset base and changed weather for technology, the fund has struck to its bottoms up stock picking style and was quick to weed out the second rung technology stocks like - Aftek Infosys, Aptech, SSI.
The fund has gradually consolidated its portfolio with top 5 portfolio positions accounting for 64 per cent of assets.
The fund has the flexibility to other technology dependent sectors besides technology. And it has selectively spread its portfolio in media, diversified and hardware stocks. Interestingly, 10 percent of the assets in Reliance Industries is a tough technology sell.
Despite its selectivity and broader spread the fund has fallen just as much as the benchmark and its peers - 59 percent year-to-date fall through November 1, 2001.
Investors deep in red with Alliance New Millenium, the fund is unlikely to bring cheers in the short-run. However, in case of economic recovery, technology stocks will be among the first to benefit, and large-cap stocks will see a strong rebound. Besides, the competitiveness of the large Indian software firms remains intact.
Alliance New Millenium could benefit from its sharp focus on high growth companies. But sailing in this fund will remain turbulent as ever.