Taurus Starshare: An analysis

Due to high volatility in 2008, Taurus Starshare had nearly 30% of its assets held as cash or money market instruments. However, over a period of time it has shifted to become an equity diversified fund, with small caps carrying majority of the weight. Even though market conditions were bad, the fund was outperforming its benchmark index on all parameters. Come June 2010, large cap stocks had made a come back into the fund and have remained ever since. According to Arnav Pandya, this fund has seen an improvement in the past few months, but long term investors should stay away, especially because the overall markets are facing tough times.

Taurus Starshare

Nature: Equity oriented open ended

Assets under Management: Rs 172 crore as at 30 June 2011

Inception: January 1994

Fund Manager: Sadanand Shetty

Analysis

• The fund had nearly 30% of its assets in cash and money market instruments at the end of December 2008 as there was a large amount of uncertainty in the equity markets following the collapse of Lehman Brothers and the global credit crisis affecting the world. The fund had construction, industrial capital goods and banks as the top three sector holdings and had a slightly aggressive approach in terms of its purchases. The top two individual holdings of Crompton Greaves as well as Jaiprakash Associates had an exposure of 9 % each while the next one which was Aditya Birla Nuvo had an exposure of just 4.4 %. At this point the fund was outperforming its benchmark the BSE 200 only for the period of 5 years and above.

• Six months later the fund still had 11% of the assets in cash and its portfolio now resembled a normal equity diversified fund. Banks, petroleum products and consumer non durables were the top 3 sectors while there were a lot of individual holdings added to the portfolio during this time period. Reliance Industries, Cipla, ICICI Bank, Patel Engg and ITC were the top holdings with the highest exposure at below 5% of the portfolio.  The performance of the fund also improved and it was outperforming the benchmark on all parameters except the 1 year period.

• There was a change in the portfolio composition over the next 6 months and by December 2009 pharmaceuticals was the sector with the top holdings. This was followed by software and consumer non durables.  The weight in the portfolio also shifted to small cap stocks as the top holdings were Jain Irrigation, Rallis, Exide, Castrol and Ranbaxy where only one out of the five was from the large cap space.  The fund had shifted its attention to domestic consumption story to bank on the future growth for its portfolio and at this point of time too 8%of the portfolio was in cash. The performance though had slipped as it was outperforming the benchmark only for the 5 years and above time period.

• The performance of the fund did not improve much in relative terms and it remained an outperformer only on the 5 year time frame after a further six month. Banks, software and industrial products were the top sectors in terms of holdings at the end of June 2010. In terms of the individual stocks the large cap stocks made a good comeback into the top holdings list and while Jain Irrigation remained at the top of the investment list it was joined by Reliance Industries, Infosys and ICICI Bank. The top holdings of the fund were just above the 5%  mark and there was still 11% in cash which was a bit of a surprise. 

• The top holdings of the fund remained titled towards the large caps with Reliance Industries, Infosys, ICICI Bank, M&M and ITC being the top 5 holdings. The banking sector continued to be the top sector with a predominance of the private sector banks in the portfolio and this was followed by the industrial capital goods and software sectors. The fund performance was such that while there was some outperformance on the 1 year time horizon it was trailing the benchmark on the other time parameters.

• A near similar situation has been witnessed nearly six months later in terms of the portfolio exposure with the top sectors being banks, consumer non durables and software. This strategy seems to be paying off with improvement being visible in the performance of the fund in recent times. 

• There is a slight improvement in the performance in the last six months but the question is whether this will continue into the future especially as the overall markets are facing tough times. Long term investors can currently stay away from the fund but those with a positive view on large caps as well as for banks to deliver returns can add this fund to gain from the validation of their view.

For full details of the fund including NAV performance, portfolio, and peer comparison click here.