Fund Call. Birla Sun Life Advantage Fund: This veteran has earned its stripes

The Indian equity markets have been quite volatile and eventful in 2016. Having lost 20 per cent in the first two months, the S&P BSE Sensex has since bounced back strongly and trades close to its yearly highs.

Birla Sun Life Advantage fund has managed to navigate these ups and downs deftly. This large-cap biased multi-cap fund may not have topped the charts in the past, but has managed to climb up on its rankings, thanks to its recent show. Investors with a moderate risk appetite and a long-term investment horizon can consider this fund.

Over the last one, three and five years, the fund has beaten its benchmark, BSE 200, by 6-15 percentage points. Its returns are a notch higher when compared to other top performing funds such as ICICI Prudential Multicap Fund and Birla Sun Life Equity Fund. The fund has now graduated into the top quartile across one, three and five year time frames.

Its consistency has perked up as well. On a one-year rolling return basis, in the last five years, it has beaten its benchmark 57 per cent of the time. But over a three-year period, it has improved to a much healthier 94 per cent. The change in the fund manager in October 2011 seems to have turned around its fortunes.

Following a lacklustre 2013, as the markets zoomed in 2014, the fund took off in full afterburner, gaining 60 per cent, while its benchmark rose just 35 per cent. The fund’s large-cap stock selection paid off as HDFC Bank, ICICI Bank, IndusInd Bank, Yes Bank, LIC Housing Finance and Maruti Suzuki gained between 40 and 91 per cent.

Its mid-and small-cap calls in auto and finance were spot on. It added to its holdings in Eicher Motors even as the stock trebled while using the strong rally in Repco Home Finance to trim its holdings. The fund also benefited by buying into stocks such as Asian Paints, Berger Paints, Bosch, Shree Cement and Amara Raja Batteries as they rallied between 53 and 115 per cent. Timely exit of Jaiprakash Associates helped cap losses.

As markets turned choppy in 2015, the fund gained in strength, rising 5 per cent while its benchmark lost 1.5 per cent. Select holdings in autos, private sector banks and pharmaceuticals helped to prop-up returns.

The fund contained its losses by exiting SBI, Federal Bank, Tech Mahindra and Shoppers Stop before they went out of flavour. The fund does well in rallies too. After merging BSL Long Term Advantage Fund with itself in February 2016, the fund blitzed its benchmark gaining 32 per cent versus 23 per cent.

The fund is betting on a mix of economic recovery, consumption and defensive themes. Top five sector account for around 65 per cent of its portfolio.

While the fund adopts a concentrated investment strategy, its top 10 stocks are spread across six sectors. It holds 40 stocks across 19 sectors in its portfolio. The fund prefers to remain fully invested in the market, so significant cash calls are not taken.

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