The Hindu Business Line : Birla Advantage Fund: Hold

Unitholders in Birla Advantage Fund can retain their investments as part of their diversification strategy, provided they already hold large-cap funds such as HDFC Top 200, HDFC Equity and Franklin India Bluechip. The fund's return has trailed the Sensex over the last year. Its three-year and five-year returns, however, are better. Fresh exposure to the fund can be avoided for now.

The fund has a mandate to reduce its exposure to equity below 70 per cent during extremely volatile market conditions. However, the fund went against the grain and stayed fully invested in equity during the May correction. Thanks to the presence of large-cap stocks in the portfolio, the fund has bounced back firmly from the lows it touched in June.

Birla Advantage Fund moved gradually from mid-cap stocks with market capitalisation less than Rs 2,000 crore to large-cap stocks. Exposure to this segment, that was 20-30 per cent in the previous years, has come down gradually and in the latest portfolio, it constitutes only 5 per cent of the assets.

Performance: Birla Advantage Fund trailed its benchmark Sensex by nine percentage points over the past year. The last four months' performance may have dragged the year's average, as is the case even with a few top diversified funds. The one-year return, at 34 per cent, trails peers such as HDFC Equity and HDFC Top 200, which delivered about 44 per cent.

Portfolio Overview: The fund's assets are highly concentrated in 31 stocks, the top ten accounting for 49 per cent of the asset base. The top three sectors — software, banks and consumer non-durables — corner 41 per cent of the portfolio.

For close to a year, the fund has been bullish on sectors such as banks, consumer non- durables, pharma, capital goods and software. However the asset allocation to pharma has now come down drastically.

Some prominent stocks that have been in the portfolio for close to a year are ACC, BHEL, Hero Honda and Infosys Technologies, as well as Balrampur Chini, Subex Systems and Pfizer from the mid-cap space.

Fund facts: Birla Advantage Fund was launched in February 1995. Managed by Mr Ajay Argal, the fund has assets under management of Rs 458 crore. The entry load is 2.25 per cent up to an investment of Rs 5 crore.

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