Birla Sunlife Frontline Equity: Consistency wins the day

Looking for an equity fund that tides over volatility with panache and fetches good long-term returns?

You can consider Birla Sunlife Frontline Equity. The scheme invests over three-fourths of its assets in large-cap stocks. Since its inception in August 2002, the fund has delivered annual returns of almost 24 per cent.

The scheme’s returns have been higher than those of the BSE 200 Index by over 5 percentage points over one-, three- and five-year time frames. Besides delivering benchmark beating returns, the fund has also bettered peers, such as Canara Robeco Large Cap+, HDFC Top 200 and Reliance Top 200 across all time periods.

The fund scores over its peers on consistency too. Over the last five years, the scheme’s one-year returns have been higher than its benchmark almost 99 per cent of the time. The scheme’s expense ratio of 2.2 per cent is lower than its peers. Besides these, the fund outscores its benchmark on a risk-adjusted return basis too.

The scheme’s Sharpe ratio (as on September 30) is at 0.8. This is higher compared than the 0.48 of the benchmark and 0.49 of peers such as HDFC Top 200. The higher the Sharpe ratio, the more the return an investor gets per unit of risk.

Investors with a moderate risk appetite can consider investing a portion of their surplus in Birla Sunlife Frontline Equity.

In the past, Birla Sunlife Frontline had managed to contain downsides well during market falls. For instance, during the January 2008-March 2009 period, the fund managed to contain the downside at 44 per cent, lower than the 54 per cent fall in the BSE 200 Index. Similarly, when the markets were volatile between January and August 2013, the fund managed to limit the decline in its NAV to less than 13 per cent, while its benchmark shed over 15 per cent. Higher exposure to less-volatile blue chip stocks helped the fund stay afloat during such rugged phases.

After a modest show in 2012 and 2013, the fund’s performance vis-a-vis the benchmark improved. Adding stocks, such as Glenmark Pharma and Eicher Motors to its portfolio, aided performance. Likewise, the scheme’s exposure to stocks, such as Britannia Industries, Cummins India, Bajaj Finance, IndusInd Bank and Jet Airways also provided a boost to its NAV in the last one year.

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