ING Dividend Yield has a mandate of investing predominantly in stocks that offer high dividend yield. It is a diversified equity fund with a track record of more than seven years.

The fund has outperformed its benchmark, the BSE 200, over one-, three- and five-year periods. When compared with peer group funds, the scheme has been an above-average performer. Over one- and three-year periods, it has delivered 24 per cent and 9.3 per cent returns, respectively. The fund beat its peers such as BNP Paribas Dividend Yield, Principal Dividend Yield, Tata Dividend Yield and UTI-Dividend Yield by delivering 8.4 per cent returns over a five-year period.

The fund is placed at the middle of the list of funds that have a dividend yield strategy. We take a look at the fund’s sector and stock choices for the past three years.

SECTOR TRENDS

The fund increased its allocation to banking stocks in the first quarter of 2011. However, when the economy slowed down during that year and as stocks started declining, the fund gradually trimmed its allocation to 8.4 per cent by December 2011. After markets bottomed out in December 2011, the fund once again, progressively, increased its allocation in this sector and as of December 2012 it has one-third of its total portfolio in banks, which has aided its out-performance.

The fund has been maintaining its holdings above 10 per cent in the consumer non-durables sector, which is the second largest it holds.

The software sector, which had a secular run in 2009 and 2010 had been an underperformer in 2012. The fund started to reduce its exposure in software in the first quarter of the year 2011. Media and entertainment, an outperformer in recent times, figures in its portfolio. The fund has pared its exposures in automobiles and pharma.

STOCK MOVES

ICICI Bank and SBI, stocks that have gained 52 and 33 per cent, respectively, over the past one year are among the top three stocks now, which were not among the top ten a year ago. ITC as a stock has delivered 37 per cent gains in the past one year and appears to be the fund's favourite stock, finding its place in the top three holdings.

Wockhardt, a multi bagger in 2012, has found its way into the portfolio in the past five months. Bata India, Heidelberg Cement, Strides Arcolab, United Bank of India, Emami, Bank of India, and ACC are stocks that found place in the fund’s portfolio in recent times.

Bosch, Nestle India, Divis Laboratories, Bajaj Auto, Indraprastha Gas, Hero MotoCorp, Bajaj Holdings & Investment, SKF India and Bank of Baroda are some of the key stocks that the fund has exited in the past one year.

Related Topics