Rebalancing slows India Cap. Growth

25th Mar 2011 13:57

India Capital Growth Fund is a lot happier with the balance of its portfolio after a year in which the concentration risk and liquidity risk were both substantially reduced. The fund now has a broad portfolio of around 38 stocks balanced across all sectors of the economy.The fund's net asset value per share grew by 24.1% in sterling terms and by 14.6% in local currency terms, putting performance a little behind the fund's benchmark index, the Bombay Stock Exchange MidCap, which rose 25.8% in sterling terms and 16.1% in local currency terms during 2010."This was a satisfactory performance given the complete overhaul of the portfolio in the period," claimed the fund's investment manager. As a result of the desire to rebalance the portfolio, much of the year was spent with high levels of cash waiting to be deployed, which detracted from performance in the rising market.Concerns over inflation and corporate governance undermined confidence towards the end of the year prompting many investors to book healthy profits after a good run. These fears have extended into 2011, the company said, as the market worries that growth will moderate to contain rising inflation, and borrowing costs will continue to rise, crimping profits and delaying investment plans.Income in 2010 dipped to £0.23m from £0.29m the year before. Profit before and after tax declined to £10.8m from £12.5m in 2009. Cash and cash equivalents at the end of 2010 had risen to £3.43m from £1.43m at the end of 2009.The company did not declare a dividend.- - -jh