Mutual Funds

Birla Sun Life Equity: A promise of safety and spice

Parvatha Vardhini C | Updated on January 13, 2018


This multi-cap fund plays the market smartly with appropriate sector and stock calls

Birla Sun Life ( BSL) Equity provides the best of both worlds — the ability to boost returns by taking upto 20 per cent exposure to mid- and small-cap stocks and a slightly conservative approach that suits investors who don’t have a high risk appetite.

Both BSL Frontline Equity and BSL Equity are benchmarked to the BSE 200 index. But the former is a large-cap focussed fund, at best having a holding of 6-8 per cent in mid- and small-caps, even during strong bull phases such as 2014.

BSL Equity is classified as a multi-cap fund. At the same time, it follows a less aggressive approach than multi-cap peers such as Franklin High Growth Companies or L&T Value.

Performance and strategy

Having been part of the erstwhile Alliance Mutual Fund stable, BSL Equity went into a bit of oblivion after the takeover by BSL Mutual fund about 10 years ago. But the fund has bounced back, , beating the returns of the BSE 200 in each of the last five years..

Over one- , three- and five-year periods, the fund has outdone the benchmark’s returns by a convincing 10-15 percentage points. On a one-year rolling return basis, the fund has bettered the BSE 200 index 85 per cent of the time in the last five years.

The fund follows a slightly less aggressive strategy on the following counts: One, its exposure to mid- and small-cap stocks across market cycles remain a bit less than the typical multi-cap funds. In the 2014 rally, for instance, Franklin High Growth Companies took 25-30 per cent exposure to such stocks, while BSL Equity kept it at around 18 per cent.

With value lying in large-caps currently, BSL Equity has brought down mid- and small-cap exposure to 8 per cent now.

Secondly,while it usually holds around 95 per cent in equities, the holding stays at 85-95 per cent in uncertain times. This helps the fund cut losses in falling and volatile markets. In the last 3-4 months, equity holdings have come down to 85-87 per cent.

The fund’s one-, three- and five-year returns are better than SBI Magnum Multicap and Kotak Select Focus.


Banks, usually, are the top sector choice for the fund, followed by a combination of cyclicals and defensives such as automobile, software, pharma and consumer non-durables. The fund churns its sectors in tune with market conditions. Thus, it rode on the rally in late 2013 by increasing exposure to the construction space, switching to automobiles in 2014 and upping on consumer non-durables in the volatile markets of 2015.

While it has brought down holdings in HDFC Bank, IndusInd Bank and Kotak Mahindra Bank in the last one year, Yes Bank and Bank of Baroda have found favour. Tech Mahindra has been preferred over Infosys and HCL Technologies in the last few months. Considering the high valuations of Maruti Suzuki, the fund has pared holdings here and instead brought in Hero MotoCorp, banking on the revival in rural demand and Ashok Leyland, betting on pre-buying before the BS-IV norms kick in.

Published on February 18, 2017

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