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Investors can buy the units of Birla Sun Life 95 Fund (BSL 95), given its long-term track record in delivering steady returns. The fund is among the top performers in the (equity-oriented) balanced funds category in the last ten years. Its 22 per cent compounded annual return over a ten-year period beats peers such as HDFC Balanced and DSPBR Balanced, while being about 3-4 percentage points lower than HDFC Prudence, the topper.
BSL 95 has managed a 9.07 per cent return over a five-year period. This matches the returns posted by seasoned diversified equity funds. This makes the fund a suitable alternative to pure equity funds, for those with a lower risk appetite.
Performance and Strategy
The fund consistently outpaces its benchmark — the CRISIL Balanced Fund index — in market rallies. One reason for this performance is its ability to increase exposure to equities at the right time. For instance, it was quick to redeploy cash into equities in 2009. By May 2009, equity holdings moved up to 75 per cent from the 55 per cent levels seen in late 2008; it hovered around 65-75 per cent for the rest of the year. This perhaps enabled the fund to better the benchmark by 22 percentage points in the 2009 upswing. The returns in rallies also get a leg-up from the fund’s preference for mid-caps, which tend to constitute one-third to one-fourth its portfolio.
It is possibly for the same reason the fund has not been able to better the benchmark during market falls even as it moved towards safer debt investments and/or stepped up on cash. While the benchmark dropped by 34.5 per cent in the 2008 fall, for example, BSL 95 lost a higher 41.2 per cent. But the fund seems to have pulled up its socks in the recent 2011 fall, dropping only as much as the benchmark. Heightened exposure to corporate debentures, which offered attractive yields at that point in time, may have helped. To its credit, however, BSL 95 has contained losses better than HDFC Prudence in both these time periods.
Portfolio
As of January 2013, 71 per cent of the fund is invested in equities and 18.5 per cent in corporate debentures. It has completely exited Certificate of Deposits and PSU/PFI Bonds in the last few months while bringing down its exposure to government securities. Although 35 per cent of the fund constitutes mid-caps, the average market capitalisation of its portfolio stands at Rs 24,500 crore. Banks and software are the preferred sectors.
The NAV of the growth option is Rs 346.4.
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