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Investors looking for a steady bet with a large-cap tilt can buy the units of Birla Sun Life Equity. The scheme does take exposure to mid-cap stocks but sticks to only quality picks.
Its performance has improved steadily over the past few years and it has displayed the ability to contain downsides well and ensure upside participation during market rallies.
The fund has been an above-average performer and has moved to the top quartile of schemes in its category over a three-year period.
Over one-, three- and five-year timeframes, the fund has outperformed its benchmark, BSE 200, to the tune of 3-7 percentage points over the medium to long term.
Birla Sun Life Equity has delivered annual returns of 26.3 per cent over the last three years, which places it among the top few in its category and ahead of peers such as Canara Robeco Equity Diversified and ICICI Pru Top 200.
The scheme is a relatively safe bet in the current volatile markets as it does not take too many risks and sticks to stocks with sound record. Investors with a moderate risk appetite and a horizon of at least five years can consider investing through the systematic investment plan (SIP) route.
Portfolio and strategy Birla Sun Life Equity invests 17-20 per cent of its portfolio in mid-cap stocks (less than ₹10,000 crore market capitalisation). This mix of large- and mid-cap stocks allows for participation in broader market rallies.
The scheme also takes cash and debt calls to the tune of 5-7 per cent across market cycles, which would insulate it somewhat during volatile markets.
Some of the large-cap names in the portfolio are Dr Reddy’s, Tata Chemicals, Tata Motors, HCL Technologies and IndusInd Bank, which are not so expensive. VA Tech Wabag, PVR, Cox & Kings and Cholamandalam Investment are some of its quality mid-cap holdings.
Over the last couple of years, Birla Sun Life Equity has reduced exposure to the underperforming software sector. It has also pared the weightage accorded to power and construction project stocks over the last one year.
Banks, pharma and auto are the top sectors held by the fund. All three segments may be expected to have significant earnings growth over the next few years. It also provides the portfolio a desirable blend of cyclical and defensive bets.
The fund’s picks, which are mostly anchored in value, would help when markets start rallying over the long term.
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