Taurus Starshare is aimed at long-term capital appreciation and providing dividend periodically. A five-year closed-end scheme, it raised a corpus of Rs 209.56 crore against a target of Rs 80 crore. Upto 75 per cent of the fund will be deployed in equities, 20 per cent in debt instruments and 5 per cent in money markets. Also, upto 35 per cent of the investments may be utilised for trading purposes. Liquidity is available through listing in a number of stock exchanges. The fund is very actively traded.

Starshare has been an atrocious performer ever since inception. Caught on thewrong foot soon after its launch, the fund could never pay a dividend. For initial investors, the fund has resulted into a capital erosion of over 45 per cent in five years, an annualised return of -11.86 per cent.

For a brief period in 1994, the fund fared reasonably well with its NAV reaching Rs 11.20. But since the market decline in September 1994, the fund has been on a downhill with the NAV hitting a low of Rs 3.97 in early February 1998, before recovering to present levels.

In Calendar 1998, Taurus Starshare has posted a return of 10.85 per cent, thus outperforming its benchmark, the BSE Sensitive index which plunged 16.5 per cent during the year. The return on the fund has far exceeded the average return on growth funds which was 1.79 per cent.

Nearing its redemption, the discount on the fund has shrunk steadily from over 50 per cent in June, 1997 to present levels. In the past one year, the traded price of Starshare on the bourses has appreciated a record 48 per cent from Rs 2.70 to Rs 4, whichis partly attributed to the positive transition in the fund's management.

Launched in early 1994, the fund picked up stocks at high prices prevailing during the bull run of 1994 which led to its underperformance in the bear market that followed. Further, the fund had a large exposure to small and mid-cap stocks which took a heavy beating in the post-boom period. After a long wait for nearly four years, the fund initiated a restructuring in November, 1997. The new fund manager undertook rapid fire moves to overhaul the portfolio.

Despite the effort to jettison junk stocks from the portfolio, the fund manager has been unable to weed them out completely. The fund had to knock out 26 paise from the net asset value on account of provisioning for depreciation, says the fund manager Ramesh Raizada. Today, the fund is spread over 130 odd stocks, but the concentration level of the portfolio has been increased significantly with top thirty stocks accounting for 90 per cent of invested assets. Furthermore, 55 percent of assets are invested in top ten holdings. And the top thirty is all new. Just five stocks - Reliance Industries, HLL, ACC, State Bank and New Delhi Television - figure from the pre-restructured portfolio figure in the latest top thirty holdings. The fund has shifted focus to the rulers of the season - infotech, fast moving consumer goods and pharmaceutical stocks. Five out of the top ten holdings are infotech stocks.

As on January 13, 1999, the IT sector accounted for nearly a third of the portfolio, while stocks of FMCG companies and pharma companies accounted for 13.88 per cent and 8.93 per cent respectively. Recently, the fund has acquired ten thousand shares of Wockhardt at an average price of Rs 312 and 18,000 shares of German Remedies at a price of Rs 760. This further increases the exposure to the pharma sector.

The third quarter results of the infotech companies has once again instilled confidence in this sector. The long term prospects for the pharmaceutical sector, particularly the MNCstocks looks bright as these companies will gain handsomely once the patent laws are in place. With a focus on the sectors which are expected to continue to outperform the market, the fund looks promising.Starshare is being converted into an open-end fund w.e.f February 10, 1999 and the investors shall be able to join or exit the fund anytime, at NAV. Currently, the fund is trading at Rs 4.45, a discount of nearly 16 per cent on the latest net asset value. For secondary market investors, it is a fabulous opportunity to make a quick buck - buy at a discount and sell at NAV when the fund goes open-end. Initial investors will do well to stay put with the fund.

-- Value Research