Mutual Funds

MNC Funds: On a strong wicket

Yoganand D. | Updated on November 16, 2013


While the two MNC funds have divergent stock selections, they have both beaten the CNX MNC index by a wide margin.

Even as the Sensex and Nifty touch new highs, another class of stocks too has done exceptionally well over the past four-five years. These are the shares of multinational companies (MNCs).

They are financially strong and less prone to economic slowdown. Moreover, MNC stocks traditionally enjoy a higher valuation compared with their peer Indian counterparts. They also have steady dividend track records.

Generally, their cash flow positions are quite robust and most of them have very little or no net debt in their balance sheet.

Even as domestic stocks witnesses significant gyrations, the MNC stocks remain a more stable lot as they fall less during volatile markets.

Two MNC funds

Only UTI MNC and Birla Sun Life MNC are the two funds with a mandate to invest exclusively in the stocks of MNCs.

Birla Sun Life MNC has delivered compounded annual returns of 26.8 per cent per cent over the past five years outperforming its benchmark index, CNX MNC, which gained 20.3 per cent.

Both the MNC funds have outperformed the CNX MNC index over one-, three- and five-year timeframes.

Though Birla Sun Life MNC has outperformed UTI MNC by about 4-6 percentage points over a five-year period, the latter has managed to outdo its peer fund over one- and three- year timeframes.

Stocks and sector picks

Financials, FMCG and Automobiles were the top sectors in Birla Sun Life MNC’s portfolio. For UTI MNC, the top three sector allocations were FMCG, Automobile and Healthcare.

On the stocks front, both funds have divergent selections. Birla Sun Life MNC is more biased towards stocks such as ING Vysya Bank, ICRA and CRISIL.

These three stocks continue to remain in the top ten holdings of the fund for the past two years.

UTI MNC, on the other hand, is more inclined towards consumer goods and automobile stocks such as Bosch, Maruti Suzuki India, Eicher Motors, Hindustan Unilever and Colgate Palmolive India.

Both automobile and consumer goods stocks have performed well in the past two years. Some of the stocks such as Eicher Motors, Hindustan Unilever, Bosch, Maruti Suzuki India have registered new highs over the past one year.

Both the funds have moderate exposure to technology and chemicals stocks.

Oracle Financial Services Software stock is part of both the funds and while UTI MNC has marginally upped its allocation over the last one year, Birla Sun Life MNC has trimmed it a bit.

Published on November 16, 2013

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