The Hindu Business Line : Birla Dividend

DURING volatile markets such as the present one, stocks with a high dividend yield (dividend as a percentage of market price) tend to provide a cushion during downward corrections. Dividend yield funds follow a defensive investment strategy by investing in stocks of high dividend yielding companies.

We take a look at how Birla Sun Life managed its Dividend Yield Plus portfolio for the quarter ended September 2005. Birla Dividend Yield Plus is an open-ended equity scheme, which aims at providing capital appreciation and regular income.

The fund's strategy is to invest in a well-diversified portfolio of companies with a dividend yield that is at least twice that of the Sensex yield.

For the quarter ended September, the scheme retained its overweight position in consumer goods and banks segment. The two sectors accounted for 30 per cent of the net assets. While metals and hardware have found increased allocation, petroleum products saw reduced exposure during the same period. The fund made a fresh entry into the stock of Tata Steel. This exposure saw the allocation to metals increase to 6.8 percent in September from 2 per cent in June 2005.

The hardware segment gained weight through fresh exposure to Tata Elxsi. HCL Infosystems also evinced buying interest, thus augmenting the weightage of hardware stocks.

The fund pared exposures in most of the oil stocks in its portfolio. Indian Oil Corporation, Kochi Refineries, ONGC and Bongaigaon Refinery witnessed partial profit booking. It also re-jigged its preferences for banking stocks.

While the stock of IndusInd Bank exited the portfolio, Syndicate Bank found favour. Exposure to the pharmaceutical sector increased with the entry of Wyeth.

The fund also accumulated the stock of Abbott India. The number of shares held in the company increased by 45 per cent. Exposure to auto sector remained largely unchanged.

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