As the number of asset management companies increase, so do the number of mutual fund schemes. And in order to be 'different', companies introduce new elements into their product strategies.

Today there are special situation funds, several opportunities funds, multi-cap funds... the list goes on.

In this analysis, we look at the objectives of such funds and if the interesting names mean much. Are these funds any different from the average diversified equity fund? In a nutshell, the answer is one cannot be sure.

Let's take stock of some of these funds. Fidelity India Special Situations Fund was launched in April 2006 and was Fidelity's second diversified equity fund. When this fund was launched, its tagline in the advertisements was, "Not common knowledge, but uncommon insights".

The distributors followed it up with stories of how Fidelity can identify special situations and turnaround stories. And the marketing material read, "Special situations are unusual or out-of-the-ordinary circumstances that a company or its stock can face.

For instance, a company could be turning around from a low ebb while another could be in the midst of a merger or an acquisition. There could be a company launching a new product or a new business stream. Or, a stock could be selling at a discount to its underlying value or simply be out of favour. The list of special situations can go on and each could present investing opportunities. The challenge lies in identifying and interpreting the potential of investing in such situations". Broad themes indeed.

So let's take a look at the February portfolio of the Fidelity India Special Situations Fund and try and discover some of these special situations stocks.

Its top three picks ICICI Bank [Get Quote], State Bank of India [Get Quote] and Satyam [Get Quote] are a part of another 137, 144 and 146 schemes respectively, and account for almost 22 per cent of the fund's portfolio. There is little reason for investors to believe how these investments would be 'special situations'. (see Similar Stocks)

However, on the performance front, the scheme has done quite well so far vis-a-vis other funds in the same space over a six month horizon, with only a few schemes having been able to beat it by a huge margin. At present, it is moving in line with some of the other schemes in the market.

SIMILAR STOCKS Fidelity India Special Situation Fund's holding as on Feb 28, 2007
Company	Nature	Value (rs cr)	%
ICICI Bank	EQ	172.12	8.51
State Bank of India	EQ	145.86	7.21
Satyam Computer Services	EQ	130.54	6.46
Dr Reddys Laboratories	EQ	60.81	3.01
Kotak Mahindra Bank [Get Quote]	EQ	59.49	2.94
Tech Mahindra [Get Quote]	EQ	53.83	2.66
Bajaj Auto [Get Quote]	EQ	53.80	2.66
Tata Consultancy Services [Get Quote].	EQ	51.34	2.54
Pantaloon [Get Quote] Retail (India)	EQ	49.79	2.46
Bank of Baroda [Get Quote]	EQ	48.27	2.39

Similar broad themes were proposed during the launch of HSBC India Advantage Fund and SBI One India Fund, as well. SBI Mutual Fund, in fact, took it to the next level by breaking up the portfolio by region, that is, there was some east, west, north and south logic introduced by this fund. The portfolio of SBI One India Fund is not yet out as the fund is yet to be invested.

HSBC Advantage India Fund seeks to generate long term capital growth by investing primarily in sectors, areas and themes that play an important role in, and/or benefit from India's progress, reform process and economic development. These could include consumption, reforms, infrastructure, outsourcing and global competitiveness.

However, one look at HSBC Advantage India's portfolio and the other schemes of HSBC like HSBC Equity Fund or HSBC India Opportunities and you will see similar stocks such as Reliance Industries [Get Quote], Punjab National Bank [Get Quote], BHEL, Reliance Communications [Get Quote], Bharti Airtel [Get Quote], Jaiprakash Associates [Get Quote] and Punj Lloyd [Get Quote] in all of them.

So, at the end of the day what is really different between HSBC Advantage India and HSBC India Opportunities or for that matter HSBC Equity? If you see the performance, HSBC Advantage India has underperformed HSBC India Opportunities Fund by a huge margin and even the flagship HSBC Equity by around 8 per cent since it was launched (Feb 24, 2005.)

Now take a look at Franklin India FlexiCap and Franklin India Prima Plus Fund. Their top five picks are almost similar with four common stocks. These are Reliance Industries, MICO, Bharti Airtel and Infosys [Get Quote].

In terms of performance, however, Franklin Prima Plus has done better than Franklin FlexiCap by almost 3 per cent since the launch (March 7, 2006). However, Franklin Flexicap has performed very well compared to Prima Plus if we consider its first year performance. The point here is how funds are really similar to each other.

The moot point for all investors is that exotic names or smart taglines are not important, and what truly matters is performance. In such a scenario where funds continue to mushroom with fancy names and unique objectives, investors need to take a hard look at the role of each fund in their portfolios.

Take a look at the stocks a fund holds and you will see whether it's really different from other schemes or is just old wine in a new bottle. If it's a me-too scheme then it's not adding enough diversity to your portfolio and you need to evaluate whether such a fund merits any inclusion in your portfolio.