Birla Sun Life Long Term Advantage: Buy

Investors can buy units of Birla Sun Life Long Term Advantage in the light of the fund’s improving performance over the past three years.

The fund is an analyst-driven fund, where Birla’s equity team parks its high-conviction stocks from across sectors. Rather than focussing on sector weights, the portfolio is thus focussed on selecting the best stocks within each sector.

Currently, it is predominantly large-cap oriented, though it does take some exposure to mid-cap stocks as well. The fund has been able to ride the broader market rallies over the past three-four years well.

Over the one-, three- and five-year timeframes, Birla Long Term Advantage has beaten the BSE 200, its benchmark. The level of outperformance has been to the tune of 4-9 percentage points across market cycles. It has also managed to do better than the category’s average returns over these time-frames and peers such as ICICI Pru Top 200 and L&T Equity. The scheme differs from the Birla Sun Life Frontline Equity fund in the higher proportion that it allocates to mid-caps (15 per cent).

In terms of their portfolios’ average market capitalisation too, there is a difference.

The portfolio of this fund has an average market capitalisation of around ₹38,000 crore, much lower than that of Birla Sun Life Frontline Equity.

Investors with a reasonable risk appetite looking for a suitable diversifier to their portfolios can buy units of the fund. Although Birla Long Term Advantage has exposure to mid-caps, its top holdings and a large portion of its portfolio comprise quality names, mostly from the Nifty basket. This makes the overall portfolio somewhat safer in case of corrections.

Banks and software have always been the top holdings of the fund.

It increased stake in IT early in 2013, which helped it participate in the sector’s rally. It raised exposure to consumer non-durables in 2012, which helped it ride the upswing in the space.

As valuations soared, it trimmed exposure to the sector. In recent times, the fund has increased stakes in petroleum products and taken to the cyclicals through investments in construction stocks.

The fund does not take concentrated exposure to stocks, with weightage to individual scrips being less than 5 per cent most of the time.

With its over-reliance on large blue-chip names, the fund has managed outperformance, but not spectacular returns.

Investments made with a minimum of at least a five-year time frame have been fruitful, with the fund delivering category-beating returns.

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