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Fund Pick: Libra Leap

Libra Leap, a five-year term close-ended equity fund launched in May 1996 was converted into an open-ended fund on February 11, 2000. In November 1999, HB Asset Management was merged with Creditcapital AMC. Consequently, now the fund is managed by the merged entity, Creditcapital AMC, the managers of Taurus Mutual Fund.

The fund has declared a maiden 101 per cent dividend which is available to all investors of the fund as on March 17, 2000. Entry in the fund carries a 2 per cent load while redemption is at the net asset value (NAV). The dividend at the current entry price of Rs 52.54 will result in an instant yield of 19.05 per cent - an attractive dividend-stripping opportunity. But that's not all. Read on!

Based on its current NAV, the fund has given a handsome 55 per cent annualized return since its launch. But the fund performance has been really erratic. Launched at a time when the markets were in a strong bear grip, the initial one and a half years saw the NAV plummet to a low of Rs 7.66 in December 1997. However, the fund's fortune changed with the market in October 1998. The fund gained 190 per cent in calendar 1999 against a 58.8 per cent rise in the BSE Sensex. And in recent months, the fund went ballistic gaining 89 per cent since January 2000.

The reasons are understandable. Today, the top holding of the fund -- Himachal Futuristic, accounts for a whopping 58 per cent of the portfolio. This implies that for every rupee invested in the fund, 60 paise buys you Himachal Futuristic. This makes the fund a proxy for the stock, making the fund extremely vulnerable to any downturn in one stock. The fund has also taken a 4.6 per cent exposure in the media sector with Zee Telefilms and Cinevista Communications. The top ten stocks account for 85 per cent of the net assets.

The fund lacks a long-term performance track record, as the fund closely tracked the market till June 1999 and most of the gains have come from its huge bets on a few stocks. Interestingly, the fund's co-sponsor HB Portfolio Ltd owns as much as 25 per cent of the fund's units. Besides, the other equity funds of the family, Taurus Starshare, Taurus Discovery (earlier Newshare) and Taurus Genshare have proved to be a disastrous investment till recently. The funds have gained only in recent months in a rising market.

This fund could deliver high returns but it is an abnormally risky investment proposition.

Fund Basics
Objective	Size (Rs cr)	NAV (Rs): 7/3/2000	Exit Price	Entry Price	Total Returns
Growth	99.6	51.51	51.51	52.54	54.91%
Benchmark Comparisons (%)					29/2/2000
	1M	3M	6M	1Yr	3Yr
Fund	34.8	114.3	130.6	271.0	65.3
Sensex	4.6	17.8	11.2	60.2	14.3
Nat. Index	14.5	46.2	50.2	118.5	27.6
Obj. Avg.	7.5	40.1	53.5	129.9	36.7
Top Holdings (6/3/2000)			Value (Rs cr.)		Net Assets (%)
Himachal Futuristic			57.66		57.89
Orient Info			6.01		6.03
Zee Telefilms			4.64		4.66
Jaiprakash			3.03		3.04
Ram Informatics			3.00		3.01
Punjab Anand Lamps			2.57		2.58
Infosys			2.37		2.38
Ceat Tyres			2.24		2.25
HDFC			1.89		1.90
NIIT			1.48		1.49
Maral Overseas			1.29		1.30
Vikas WSP			1.19		1.19
IEC Software			1.06		1.06
HCL Infosystems			0.84		0.84
Lupin Labs			0.81		0.81
Nestle			0.79		0.79
Bajaj Auto			0.78		0.78
Cadila Healthcare			0.63		0.63
Alok Textiles			0.62		0.62
Thomas Cook			0.52		0.52

Source: Value Research

Mutual Funds

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