The Hindu Business Line : Birla Sun Life Frontline Equity

Birla Sun Life Frontline Equity, a fund that seeks to invest in a diversified portfolio with a large-cap tilt, has consistently outperformed its benchmark — the BSE 200 — over one, three and five-year periods. A look at the degree of shuffling in the fund’s portfolio over a six-month period reveals that this large-cap bias has remained intact, helping performance.

Sector Moves: Investments by the fund over the past six months indicate that this fund prefers to stick with the ‘in’ themes in the market, rather than swim against the tide. Capital goods (19.72 per cent in November) continues to be the top sector in the portfolio, followed by banking, which has seen a slight decline in terms of overall exposure.

Interestingly, riding on the Infrastructure theme, the fund’s construction sector exposure has been doubled to over 9 per cent. Cement has found favour, with the sector exposure going up by four times to 5.22 per cent. Media and Entertainment has also seen a big ramp-up, accounting for 5.22 per cent; this must have served the fund in good stead during the recent run-up in media stocks. Ferrous metals, petroleum and oil and gas segments have all seen increased exposures.

Exposure to software, an out of favour sector in the markets due to fears of rupee appreciation and global cues, has been cut to less than half the previous levels. Sectors such as Automotives, auto ancillaries and pharmaceuticals have all seen reduced exposures. Interestingly, telecom, despite its “growth story”, has seen pared exposures, with exposure reduced to 5.7 per cent, nearly half the earlier levels. After these changes, the fund sports a really diversified look, with a better spread across sectors, with 5-6 per cent in each of them, barring the top three. The cash position has also increased to around 7 per cent, not a very high level, perhaps for liquidity reasons.

New Sectors Added

Non-Ferrous metals, power and transport are new sectors added, with the addition of stocks such as Sterlite Industries, Tata Power and Mundra Port, respectively.

Stock Moves

Crompton Greaves is the top holding while Jindal Steel and Power, which wasn’t in the portfolio six months ago, is now the second largest holding for the fund. Balaji Telefilms, Punj Lloyd and Suzlon Energy, which figure among the top 10 holdings of the fund, are new add-ons. Big-ticket additions include SBI, Indian Bank, and OBC in the banking space. India Cements, HDIL and Ansal properties are some of the infrastructure stocks added.

The fund has exited heavyweights such as L&T, M&M, IOC, VSNL and HUL, perhaps due to their sharp run-up. In the software sector, HCL Technologies finds itself out, while the other top-tier IT companies remain, albeit with much lowered exposures compared to six months ago.

Stocks such as Reliance Industries, Grasim Industries, ONGC, BHEL and ICICI Bank have continued to be with the fund and are among its top holdings.

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