JM Basic - Mercurial Rise

Coming out from the depths of mediocrity, the fund has shone like never before. The JM Basic fund has its tremendous returns to back itself, but the overly cautious might want to stay away

JM Basic has left behind its days of mediocrity and is unabashedly trouncing the competition. As on October 10, 2007, its year-to-date return was 65.37 per cent, a lead of around 32 per cent above the category average.

The fund's recent performance wouldn't mean much if it weren't indicative of something more. It is. Sandip Sabharwal took over as CIO (Equity), JM Mutual Fund, in December 2006 (fund manager Asit Bhandarkar joined at the same time). Together, their turnaround of the portfolio was nothing short of dramatic.

The problem of domination by few sectors was dealt with by broadening the investment mandate. So besides energy and petrochemicals, it now includes power generation and distribution, electrical equipment supplies, metals, construction material and construction. Hindustan Construction, IVRCL Infrastructures, Nagarjuna Construction, Action Construction and Punj Lloyd all came in under the fresh mandate. The portfolio was also beefed up from a meager 12 stocks (November 2006) to 27. While this has done well to mitigate the risk, the allocation to large caps decreased. Bharat Electronics, Siemens and Suzlon made way for smaller stocks like Bharti Shipyard, Kalpataru Power, Thermax, Cummins India, Greaves Cotton, MIC Electronics and Apar Industries.

This isn't a fund for the cautious. Its risk lies in its limited investment universe. Sectors like banking, pharmaceuticals or technology will never find a place here. So though it is hard to argue with its excellent results, it may be too narrow a choice for some investors. Consider it in conjunction with your overall portfolio and risk appetite.

(by valueresearch)