The Hindu Business Line : Birla Sun Life Equity Fund: Hold

Unitholders can stay with Birla Sun Life Equity Fund. It's three-year and five-year record places it among the ten top performing mutual funds under the diversified category. The fund was launched in August 1998 under the Alliance Equity Fund umbrella and later moved into Birla's fold in September 2005.

Its investment objective is to put 90 per cent in equity and the rest in debt, as its mandate permits it to invest across any market capitalisation. Despite this, the fund under the Alliance umbrella predominantly invested in large-cap stocks. Birla Sun Life Equity, despite the change of guard, maintains a similar asset allocation formula. Of the last 24 months, it outpaced the benchmark BSE-200 in 13 months.

Even during the mid-cap rally of 2004 and 2005, this fund did not increase its exposure to stocks with market capitalisation less than Rs 2,000 crore beyond 33 per cent. As the mid-cap stocks rallied, the fund booked profits regularly and reduced their exposure to this segment. During the market correction in May 2006, its holdings in mid-caps were down to 15 per cent of the portfolio. This strategy helped it regain much of the value during the market rebound. However, the fund has not capitalised on the mid-cap boom despite flexibility to invest across bands.

This strategy implies that if you are a conservative investor looking for moderate return you can remain invested with this fund. However, its performance over the past year marginally trails its benchmark and generated a return of 37 per cent. Over the same period, Franklin India Bluechip and HDFC Top 200 returned 48 per cent and 54 per cent respectively. This fund's three-year and five-year returns place it above the Franklin India Bluechip Fund. Its latest portfolio lends confidence and it consists predominantly of large-cap stocks, while exposure to mid-caps has come down to 6 per cent.

Portfolio Overview: The fund holds 48 stocks in its portfolio, the top ten accounting for 40 per cent. Like other diversified funds, Birla too has enhanced its exposure to the software sector. BHEL, Bharti Airtel, Infosys, Siemens and Trent are the few stocks that figure in its portfolio for over a year. The NAV is Rs 147.50.

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