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Canexpo

Dhirendra Kumar

Canexpo, a specialty equity fund from Canbank Mutual Fund invests in export-oriented units and companies with strong forex earnings. Canexpo is not a sector fund. Launched as a five-year closed-end fund in February 1994, the fund was converted into an open-end structure in May 1999. The fund paid a 10% dividend in December '99 and 12.5% in June 2000. The fund levies an entry load of 1.85%.

FUND BASICS   Objective    Size (Cr)    NAV: 26/04/2001    Exit Price    Entry Price    Total Return   Growth   25.43   12.05   12.05   12.27   4.20%

With Canexpo, it has been the case of going one step forward to move five steps backward. With freely falling markets, year 2000 was not good for the fund with its strategy failing it. Despite a high portfolio turnover, the fund booked losses in its stocks outside the TMT sector. Though, Canexpo has over the years changed tack to adopt an active management of the portfolio, it is yet to learn the art of successful stock picking strategy. As if that was not enough, the fund had its risks unchecked. Very high concentration in the sector of TMT and in select stocks within it proved to be the undoing for the fund.

The fund's allocation to TMT peaked to 75% in February 2000 with Infosys alone accounting for 32% of the portfolio and SSI another 16%. In calendar 2000, the fund lost 29%. This is thanks to a lesser fall in the price of Infosys, the fund lost far less than its peers with similar aggression.

BENCHMARK COMPARISONS (%)      1M    3M    6M    1Yr    3Yr   Fund   -19.83   -19.21   -26.42   -53.80   22.56   Nifty Tot. Ret.   -12.05   -6.49   -8.28   -24.57   2.39   Sensex   -11.81   -6.93   -9.85   -28.93   -2.84   Obj. Avg.   -12.75   -9.06   -8.41   -19.97   25.50

The fund's downturn since year 2000 has interrupted the spate of positive performance since 1997 that came by after the successful restructuring of a passively managed low quality portfolio. However, with quite a large chunk of gains sheared away in the tech meltdown, the return of the fund since its launch is rather poor at 4.53% as against -0.67% by the sensex.

With the fund continuing to have an average 60% in TMT sector and 30% of the portfolio in Infosys, unpleasant surprises in the future cannot be ruled out. For all days are not the same. Besides, the fund is yet to have a well thought out stock picking strategy.

Top Holdings (28/02/2001)      Value (Cr)    % of Assets   Infosys Tech.   6.26   24.61   S S I   1.64   6.45   HDFC   1.19   4.67   Wipro   1.02   4.00   Cipla   1.01   3.99   Hoechst Marion Roussel   0.98   3.86   VSNL   0.96   3.78   HLL   0.92   3.61   Larsen & Toubro   0.91   3.60   BHEL   0.81   3.18   I T C   0.78   3.06   Ranbaxy Lab.   0.69   2.71   Tata Tea   0.67   2.64   N I I T   0.62   2.44   TISCO   0.62   2.43

Source: Value Research

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