The Hindu Business Line : Birla Midcap Fund: Invest

Birla Midcap has consistently outperformed CNX Midcap in 19 of the past 24 months on a rolling-return basis. Investors can route investments in the fund through SIPs.

Investors can consider exposure in Birla Midcap, given its reasonably good record.

The fund has generated a return of 45 per cent on a compounded annual basis over a three-year period and outpaced its benchmark CNX Midcap by 12 percentage points. It has, however, trailed its peer Sundaram BNP Paribas Select Midcap by 15 percentage points during the same period.

Suitability: Birla Midcap Fund has a strategy of investing at least 65 per cent of its assets in mid-cap stocks, which tend to be more volatile than large-cap stocks.

During the May-June 2006 correction, the fund lost close to 55 per cent but contained losses better than its benchmark.

The fund is, therefore, suitable for investors looking for a high risk-return blend and wanting to diversify in the mid-cap space. Magnum Global remains our top pick in the mid-cap segment.

Birla Midcap has consistently outperformed CNX Midcap in 19 of the past 24 months on a rolling-return basis.

Investors planning to take exposure into this fund can route their investment through SIPs instead of making their investment at one go. This will enable average cost over different market cycles.

Performance: Birla Midcap returned 29 per cent over the past year, outpacing its benchmark by 6 percentage points. However it trailed Magnum Midcap and Magnum Global over the above period. This can be attributed partly to low exposure in the construction sector.

Its above-mentioned peers, however, rode the construction boom resulting in out-performance. Birla Midcap, however, appears bullish on auto ancillaries. As this sector holds potential, the fund's hold strategy on the same may pay off over the long term.

Portfolio Overview: Birla Midcap has a diversified portfolio of 43 stocks. The fund has restricted its exposure in a single stock to 5 per cent.

Top ten stocks accounted for 36 per cent of the assets and the preferred three sectors cornered 34 per cent of the portfolio.

The fund appears to follow a strategy of periodic profit-booking in the stocks it holds. Only about nine stocks have stayed in the portfolio over the last six months.

Fund facts: Birla Midcap Fund was launched in October 2002 and is managed by Mr Jayesh Gandhi. The fund has an entry load of 2.25 per cent and no exit load.

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