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Vidya Bala

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Investors can consider exposure in Birla Sunlife Equity as the fund continues to deliver consistent returns. It continues to find a place in the top quartile of the one-year performance chart of diversified funds. Its three and five-year returns of 45 per cent and 58 per cent, respectively, inspire confidence, having beaten the benchmark index — BSE 200 .

Suitability: The scheme’s long track record, steady performance after the takeover by Birla Sunlife (the fund was formerly under the Alliance banner) and flexibility to shift across various market-cap segments make it a suitable candidate for the core equity portfolio of a long-term investor.

Birla Sunlife Equity has, in recent times, shown higher volatility, especially on the downside. While in short corrections during 2004 and 2005 the fund declined as much as its benchmark, it declined steeper than its benchmark in the May 2006, February 2007 and the more recent January 2008 corrections. Investors may, therefore, consider routing their exposure through the systematic investment plan to enable cost averaging during volatile phases.

Performance: The fund has returned 36 per cent over the last one year, ahead of the category return of 29 per cent for the same period. It has also beaten its benchmark and the Sensex. That the fund is not among the top performers over the last one year does not appear to be cause for much concern for the following reason: funds that have topped the charts have either been theme funds or those with high concentration on some of the sectors that witnessed strong rally. Such funds have delivered super normal returns of 40-65 per cent while most diversified funds have returned lesser.

Birla Sunlife Equity has a portfolio of about 55 stocks . While several of the stocks do appear richly valued (the portfolio price earnings multiple being 45), a good number of them hold promise over a one-two year period. Crompton Greaves, Thermax, Aban Offshore and Jagran Prakashan are such instances. Over 20 stocks, including the above, have remained in the portfolio for over a year, suggesting that the fund prefers a buy and hold approach in stocks with potential.

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