Investors can buy units of Birla Sun Life Long Term Advantage in the light of the fund’s impressive performance over the past three-four years. It is a predominantly large-cap scheme, though it does take some exposure to mid-cap stocks. The fund has been able to ride the broader market rallies over the past three-four years fairly well.

Over one, three and five-year time frames, Birla Long Term Advantage has beaten the BSE 200, its benchmark. The level of outperformance has been to the tune of 6-9 percentage points over longer time frames, placing it in the top quartile of schemes in its category. It has also managed to do better than peers such as Canara Robeco Equity Diversified and ICICI Pru Top 200.

It maintains a well-diversified portfolio spread across a little over 70 stocks, making it a safe bet. Investors can buy units of the fund in small lumpsums, as the scheme can as act as a suitable diversifier for those with a moderate risk appetite.

Portfolio and strategy

Birla Long Term Advantage has increased exposure to mid-caps over the past year and now nearly a fourth of its portfolio comprises stocks with market capitalisation of less than ₹10,000 crore. Of course, its top holdings and a large portion of its portfolio comprise quality names, mostly from the Nifty and BSE 100 basket. This makes the overall portfolio somewhat safer in case of corrections.

The fund also makes appropriate sector choices to latch on to upswings. Banks and software have always been the top holdings of the fund. It benefited from the rally led by banks and financial services companies over the past one year.

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 then.

As valuations soared, it trimmed exposure to the sector, though there is still some prominence accorded to the segment. In recent times, the fund has increased stakes in automobiles, petroleum products and pharma stocks. This gives the portfolio a blend of defensives and cyclicals, though the tilt is towards the former. The fund does not take concentrated exposure to stocks, with weightage to individual scrips being less than 5 per cent.

Birla Sun Life Long Term Advantage also takes cash and debt exposure for about 7 per cent during choppy markets. Investments made with a minimum of at least a five-year time frame will work for investors looking for above-average returns.

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