Invest in Union KBC Equity Fund with Buy & Hold strategy

Union KBC Equity Fund is a Large cap fund which seeks to generate long term capital by investing substantially in a portfolio consisting of equity and equity related securities. Due to its newness in the market, investor can take small exposure in this fund with a Buy and Hold strategy, reckons Arnav Pandya.

• The fund seeks to ensure capital appreciation through a mix of large and mid cap equity holdings though predominantly in the large cap space.  The fund had around 11 per cent of its portfolio in CBLO/ reverse repo/ term deposits at the end of August 2011 and the remaining in equities. Banks were the top sector with a 17 per cent exposure at this point of time followed by software at 13 per cent and then Pharma at 7 per cent.  The fund was following a conservative approach in creating the portfolio as the top holdings had just a 5 per cent exposure. In terms of individual stocks, Infosys was at the top followed by ICICI Bank, Reliance Industries, TCS, L&T, ITC and HDFC.
• The fund continued to deploy the funds that it had and brought the non equity holdings of the portfolio down to 8 per cent by the end of February 2012.  Banks continued to be the top sector in the fund with an exposure of over 20 per cent.  Software and Consumer non- durables were the other sectors where the exposure was in excess of 10 per cent of the portfolio.  ICICI Bank was now the top individual holding with a figure of over 6 per cent followed by Infosys, Reliance Industries, ITC, TCS, HDFC Bank, Bharti Airtel and SBI.
• Six months later at the end of August 2012, the situation was not much different as Banks continued to be the top sector in the fund followed by Software and Consumer non- durables. In terms of the individual holdings the fund had ICICI Bank and ITC at the top with a 6 per cent exposure. Reliance Industries, HDFC Bank, Infosys, TCS, HDFC and SBI were some of the other large holdings in the fund.  The fund had a low portfolio turnover ratio of 0.2 times which is significant. When it came to the performance it was a slight outperformer over the last one year period as well as since inception over the BSE 100 which is the benchmark for the fund. The funds beta was 0.88 and this also gives an indication of the portfolio construction.
• Even though this is a fund which has been in operation for just over a year investors who want to follow a buy and hold strategy of investments can look towards this fund for a small exposure.