IDBI India Top 100 Equity Fund – a review

Nikhil Walavalkarmoneycontrol.comIn the hindsight, CY2014 was a smooth ride for equity investors. However, in CY2015 so far the ride has been rather bumpy and equity investors are wondering if they should bite the bullet of equity investing. Despite various concerns such as anemic earnings growth, poor monsoon and global slowdown, most investors are finding it difficult to stay out of equities. Moreover, if one is investing as per a stipulated asset allocation it pays to ignore the short term noise and go ahead with your investments in equities. In such circumstances, it makes sense to go with a large cap oriented equity fund. IDBI India Top 100 Fund (IIT100) has recently completed three years and emerged as a consistent performer so far. Investors keen to take a large cap exposure can look at this scheme with a five year view.The schemeIIT100 was launched in May 2012 and as on 30th June 2015 has assets under management of Rs 146 crore. The scheme aims to provide long term capital growth by investing in an actively managed portfolio of shares comprising CNX100. The scheme benchmark is CNX100 index. V Balasubramanian manages this scheme.Asset allocationThe fund invests in shares that appear in CNX 100 index. CNX100 consists of stocks that are part of Nifty and Nifty Junior. Portfolio compositionIIT100 is not allowed to go beyond 100 large cap stocks in India. The fund manager does not take any cash call and remains fully invested at all times. Banking and finance, automobile and pharmaceuticals are the top three sectors with 24.99%, 14.98% and 11.85% respectively. These three sectors account for 51.82% of the entire portfolio. Portfolio has 40 stocks, which indicates a fairly diversified portfolio.Investment strategyThe fund manager employs bottom up stock picking strategy while constructing the scheme portfolio. The fund manager believes in buying fundamentally sound companies with earning visibility on dips and hold on to them for long. Low turnover ratio indicates that the fund manager does not believe in churning the portfolio much. As the investment universe is restricted to large cap stocks, there is little scope to buy inherently volatile mid and small sized businesses.The fund manager has not shied away from taking calls that are not in line with broader consensus. In CY2014, the fund has the highest allocation to automobile stocks as against the industry norm of banking and finance stocks. The fund maintained an underweight position on banking and finance stocks earlier. This has paid well for the scheme in terms of excess returns it has generated over its peers. Recently the portfolio has seen some changes as allocation to automobiles has gone down and stocks from IT sector have seen an increase in allocation. The investment portfolio is aligned to the goal of avoiding excessive risks to generate extra returns over market returns.Performance of the schemeOver one and three years time period IIT100 has given 26.4% and 25.3% returns respectively. The fund has beaten the category average for large cap funds and CNX 100 by a good margin. Do refer table for better understanding of the performance numbers.

Source: Moneycontrol.com / All numbers are annualized.The scheme has given good performance when compared to peers.
Returns (%)Source: Moneycontrol.com /All numbers are annualized.DownsideLike any other equity scheme, this is an inherently risky investment, where investors may suffer capital loss. Sudden fall in stock markets can lead to loss of capital in this scheme. The scheme has got a relatively small universe of 100 stocks, which leaves fund manager with limited choices. The scheme can underperform broader Indian equity markets in case of euphoric up-move in very short time period.Should you invest?If one is comfortable with a scheme with relatively less track record as compared to schemes with decade long history, he can invest in this scheme with a five year view. Capital gains earned on investments held for more than one year are tax free in the hands of the investors. Also dividends earned from this scheme are tax exempt. Volatile nature of stock markets calls for staggered investments through systematic investment plan.