The Hindu Business Line
Investors can retain their holdings in Birla Top 100 Fund. The fund has underperformed the benchmark S&P CNX Nifty and the category average sharply over a one-year period and since its inception as well.
Large cap focussed peers such as DSPML Top 100 Equity Fund and HDFC Top 200 Fund have managed a much better performance during this period. It is best to evaluate the performance of any fund over a complete market cycle, encompassing a bull as well as bear phase.
Seen in this backdrop, as this fund has a relatively short track record, it is advisable for investors to wait and watch for an improvement in performance before making any fresh commitments. However, the fund’s sedate performance so far suggests that if this happens to be your only equity fund, you should consider a switch into other large cap funds. Birla Sun Life Frontline Equity may be a good option.
Suitability: The fund predominantly invests in stocks of the top 100 companies as measured by market capitalisation. It is allowed to invest outside this basket as a diversification measure. Funds focussed on large cap stocks are considered to be a less risky bet as returns tend to be less volatile and this fund may be suited to conservative investors on that score.
Performance: The fund’s NAV has grown by 13 per cent during the past one year and has trailed its benchmark, the Nifty, by a good ten percentage points. The fund has also trailed the category average for diversified equity funds. Peers such as DSPML Top 100 and HDFC Top 200, also focused on large cap stocks, have delivered a 27 per cent return during the same time frame. During this first quarter, the fund’s assets and NAV have both declined by about 26 per cent, suggesting that investors have stayed with the fund. If an investor had preferred the SIP route to accumulate Birla Top 100 over the past one year he would have made a negative return as of date.
Portfolio Overview: Going by the latest portfolio, the fund’s stock picks appear to be quite good. The fund has preferred to restrict its single stock exposures to less than 6 per cent over the past year. The only exception has been made for Reliance Industries, probably by virtue of the stock’s weight in the benchmark. The top ten stocks account for 43 per cent of the portfolio.
At least five-six new stocks have been added to the portfolio every month. This is not driven by fresh inflows either and indicates an actively managed portfolio.
The fund was underweight on power stocks for the major part of last year and accumulated stocks in the sector by December. The fund, launched in October 2005, is managed by Mr Ajay Argal. The NAV is Rs 18.30. There is no exit load for bonus and dividend re-investment.
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