The Hindu Business Line : Birla Top 100 Fund: Hold

Unitholders of Birla Top 100 Fund, a large-cap fund, can retain their investments. The fund has generated a return of 30 per cent since inception, though it trailed the benchmark Nifty by 2 percentage points. Over the same period, peers such as DSPML 100 and HDFC Top 200 generated a return of 40 per cent and 32.3 per cent respectively.

The fund invests at least 65 per cent of its corpus in equities and equity-related securities of the top 100 companies (as measured by market capitalisation) and the rest in the stocks with strong growth prospects and the potential to outperform the broader indices.

Suitability: This scheme is specifically designed for those who seek exposure to large-caps and prefer a blend of growth and value styles of investing. The fund's mandate permits it to invest 35 per cent of the assets outside the top 100 companies.

But, in practice, it has preferred to restrict its investments in this segment to barely 10 per cent for the past year. Birla Top 100 stayed fully invested even during the May 2006 correction and it held just close to 3 per cent of its assets in cash. Since the fund is yet to witness a complete market cycle, fresh exposures can be made once its performance record is tracked over a longer time-frame.

Performance: Birla Top-100 Fund's NAV has grown by 4.5 per cent over the past year, while the fund has under-performed the benchmark Nifty by seven percentage points. During this period, even schemes such as Franklin India Bluechip and HDFC Top 200 trailed the Nifty. One positive aspect of the fund's strategy of being fully invested is that it has been able to capitalise on the pullback in the market when it recovered in August 2006. Birla Top 100 outpaced the benchmark as well as its peers during the recovery.

Portfolio Overview: The fund's latest portfolio inspires confidence, as close to 70 per cent of the assets are invested in large-cap stocks from the Nifty basket. It appears that the fund prefers to adopt a buy-and-hold strategy with occasional profit-booking. There are 32 stocks in its portfolio and the top ten account for 50 per cent of the exposures. BHEL, ITC, Infosys and BPCL are among the large-caps, while Subex Azure, Nagarjuna Construction and Dishman Pharmaceuticals are the key exposures from the mid-ap space.

Fund facts: Birla Top 100 was launched in October 2005. Mr Ajay Argal manages the fund.

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