Daiwa Industry Leaders Fund: Invest with 3 years time frame

Daiwa Industry Leaders Fund seeks to generate income by creating a diversified portfolio primarily investing in companies identified as industry leaders. This fund is suitable for investors seeking Large cap exposure with the investment horizon of 3 year or more.

Nature: Equity Oriented Open Ended Large Cap Fund

Inception:  September 2009

Assets under Management: Rs 29 crore at the end of June 2012

Fund Manager: David Pezarkar

Analysis

• The fund was earlier under the umbrella of Shinsei Mutual fund but consequently became Daiwa Industry Leaders Fund. The fund seeks to invest in industry leaders across different sectors. At the end of June 2010, the fund had the highest sector exposure to banks at 13 per cent of the portfolio. Industrial capital goods and Petroleum products were the other sectors with an exposure of more than 10 per cent. Reliance Industries was the top holding in the fund with an exposure of over 7 per cent. Infosys, L&T, HDFC, and ONGC were the other top holdings. At this stage the fund was underperforming its benchmark the BSE 100 index since its inception.
• Six months later banks had consolidated its position as the top sector with an exposure of 16 per cent. There was a change in the second spot as software was now at this spot with a 13 per cent exposure followed by industrial capital goods. There was also a change at the top of the individual holdings as Infosys was now the top company followed by Reliance Industries, ICICI Bank, L&T and HDFC.  The fund was now outperforming its benchmark over the last one year and since inception. The portfolio turnover ratio was high at around 1.8 times.
• At the end of June 2011 the fund had the highest exposure to banks at 16 per cent of the portfolio. Software and consumer non durables were the other sectors with a significant exposure. What was interesting was that the fund had over 7 per cent of its assets in cash and cash equivalents. It had a change in its top holding from six months ago as ICICI Bank now occupied this spot. Reliance Industries, Infosys, L&T and ITC were the other main holdings. The funds portfolio turnover ratio remained high at 1.6 times. The fund continued its outperformance over the one year time period and since inception.
• The cash and cash equivalents in the portfolio remained high at over 7 per cent even six months later. Banks continued to be the top sector but not far behind were software and consumer non durables. The portfolio turnover ratio remained at around 1.5 times and now Infosys was the top holding followed by ITC, HDFC, HDFC Bank and TCS.  The fund was outperforming over the one and two years time period.
• Over the last six months the fund reduced the cash holdings in its portfolio. Banks continued to be the top sector with a 17 per cent exposure at the end of June 2012. Consumer non durables and software are the other sectors with a 10 per cent plus exposure.  ITC was now the top holding in the fund and the fund has ensured that the top holding remains in the 6-7 per cent range. ICICI bank, HDFC Bank, Infosys and SBI are the other top holdings in the fund so it is evident that this list is dominated by banks. The fund continues to outperform the benchmark over the one and two year time periods.
• Investors looking for a large cap exposure for their portfolio can consider this fund as a part of their portfolio. It is suitable for those investors who have a time horizon of three or more years.