The Hindu Business Line : Birla Midcap Fund: Invest

Investments can be considered in Birla Midcap Fund as it sports a sound three-year track record. The fund’s performance has been consistent, outpacing its benchmark CNX Midcap on monthly rolling return basis close to 75 per cent of the time in the past two years.

Birla Midcap predominantly invests in mid-cap stocks; close to 65 per cent of the assets is invested in stocks with a market capitalisation of less than Rs 5,000 crore. Mid-cap stocks, in general, tend to be more volatile than their large-cap peers. The fund, at times, takes higher exposure to large-cap stocks. For instance, it had invested close to 45 per cent of its portfolio in large-caps during May 2006 to this segment. This has helped it weather the correction better than its benchmark.

Performance: The fund’s performance over the past year has been strong at 53 per cent, placing it among the top quartile of the performance charts in the diversified category. It has outpaced the benchmark by 5 percentage points and is ahead of established peers such as Reliance Growth.

Portfolio Overview: The fund has a well-diversified portfolio, consisting of about 60 stocks. Exposure to any single stock is restricted to less than 5 per cent of the assets. Such diversification helps contain volatility during market corrections. It can, however, limit returns in a rising market, especially when the rally is narrow.

Its top three preferred sectors account for 30 per cent of the portfolio. The fund appears to adopt a buy-and-hold strategy.

Over the past one year, it has been underweight on the construction sector. As with other diversified funds, capital goods stocks continue to be its preferred choice. A sizeable exposure to auto ancillaries may have, however, contained performance.

Over the past year, the fund’s asset base has grown substantially from Rs 149 crore to Rs 456 crore. This could partly explain why it has stepped up its cash position from 9 per cent to 13 per cent.

Fund facts: Birla Midcap Fund was launched in October 2002. The fund is jointly managed by Mr Sanjay Chawla and Mr A. Balasubramaniam.

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