Skip to main content

Birla Sun Life GenNext Fund

 

Birla Sun Life GenNext's focus on consumption-driven sectors has worked in a downturn only. The fund needs some spark to make it an all-weather choice for Generation Next



BIRLA Sun Life GenNext, launched in July 2005, sounds quite exclusive in the heap of diversified equity schemes. The fund, however, is very much akin to Kotak Lifestyle and invests in companies which are expected to benefit from rising consumerism in India. The success of these funds usually hinges on the high disposable income in the hands of the India's young generation and what they do with their income. Hence the name – Generation Next (GenNext)

PERFORMANCE:

India has emerged as one of the world's fastest growing economy. However, consumption has played only a minor role in it. According to figures by CSO, GDP growth in the country has been largely led by unprecedented expansion in the investment space while the share of consumption in the economy has been on a decline. A few items in consumer basket like telecom services and personal transport have, however, shown a speedy growth. The story, now, has a slight twist lent by the fiscal stimulus and the sixth-pay commission, which have put more money in the hands of consumers. It now remains to be seen whether the recent revival in consumption related stocks turns out to be stable or just momentary. 

   Birla Sun Life GenNext, whose core investment philosophy is consumption, has so far delivered a commendable performance only in the downturn. In rallies, however, the performance is probably just about average. In 2006, for example, the fund managed to return just about 27% against the Sensex and the Nifty returns of about 47% and 40%, respectively. In 2007, while Birla Sun Life GenNext's 58% returns did outperform the Sensex and the Nifty returns of about 47% and 55%, respectively, it was placed far below the average of the other diversified equity schemes then. 

   In 2008 the fund did relatively better than most of its peers. The market meltdown that eroded the returns of the Sensex and the Nifty by about 52%, saw Birla Sun Life GenNext fall by about 48% in that year. The fund was, thus, successful in justifying its low beta of about 0.77. (A beat is a measure of volatility of a portfolio vis-à-vis the market as a whole. A beta less than 1 thus indicates that the portfolio is less volatile than the markets.) In the current calendar year, while the markets have seen a good run-up and the Sensex and the Nifty have returned about 77% and 73%, respectively, GenNext has returned only about 56% since January to date.

PORTFOLIO:

Given its consumption orientation, GenNext has an exposure of about 26% in consumer goods sector alone. Other prominent sectors in its portfolio include Media and Entertainment, Financial Services and Auto, among others. The fund has, however, restricted its stock holdings to an average of about 30 stocks at a point of time. Given the fund's small size of just about Rs 94 crore, this diversification by and large appears quite apt. 

   However, what surprises about GenNext is the proactive churning of its portfolio. Despite being heavy on sectors like consumer goods and media, that take time to realise earnings, a majority of the fund's current holdings are less than a year old. 

   Fortunately, for the fund, some of its picks rightly timed at the beginning of the rally have yielded decent returns. These include stocks like Marico, Yes Bank, Dabur, Bajaj Auto and HT Media among others. Vigorous returns by the media and entertainment sector in the last few months also explains the fund's fancy for this sector in recent times. 

   At the same time, some of its picks like Onmobile Global, S Kumars Nationwide and TV 18 are yet to yield returns. Most of these stocks are, however, recently acquired and it would be interesting to see if the fund manager would prefer to hold unto them till they recover cost or churn the portfolio in favour of some other picks.

OUR VIEW:

Despite its defensive strategy, Birla Sun Life GenNext needs some spark that can truly make it a fund apt for the Generation Next. Nonetheless, one cannot expect extraordinary returns from consumption-based funds in the short term, though they may yield good returns over a longer duration, provided they adopt a long-term investment strategy. Notwithstanding the fund's ability to curtail the risk in the downturn, investors have better options like Frontline Equity and Dividend Yield Plus to choose from the Birla Sun Life basket.

 


Popular posts from this blog

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...

Capital Protection Oriented Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...

About CRISIL IPO Grading

CRISIL IPO (Initial Public Offering) Grading is an opinion on the fundamentals of the graded issue that reflects CRISIL's independence and expertise. This opinion is expressed as a relative assessment in relation to other listed equity securities in India. The assessment is based on a grading exercise carried out by industry specialists from CRISIL Research. A CRISIL IPO Grade 5/5 indicates strong fundamentals and a CRISIL IPO Grade 1/5 indicates poor fundamentals. CRISIL IPO Grading reflects its assessment of the graded company's equity fundamentals as distinct from an assessment of debt fundamentals. A CRISIL IPO Grade should not be construed to mean a comment on the price of the graded security nor is it a recommendation to invest or not to invest in the graded security. However, this grade is not an opinion on whether the issue price is appropriate in relation to the issue fundamentals. The grade is not a recommendation to buy / sell or hold the graded instrument, or a comm...

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now