Birla Sun Life 95 has been a long-term performer for the past 14 years, underperforming peers only thrice during this period
Over the past 14 years, this fund has underperformed its peers in just three. From 1997 right till 1999, it had a fabulous run. Since then, it has evolved into a middle-of-the-road performer that rewards investors who hang in for the long term. Its 5-year annualized return of 21 per cent (category average: 16%) as on July 31, 2010, bears testimony to that.
Last year, the fund once again had that sporadic bout of brilliance. It delivered 70.20 per cent while the category average was just 61 per cent. The bias towards mid-cap stocks clearly worked in its favour. Till 2002, the fund tilted more towards large caps but when the rally started in 2003, it changed tack and gave in to smaller fare. Having said that, the fund has been flexible in moving across capitalisation as per the market conditions. It had an allocation of around 70 per cent to mid and small caps in October 2007, which was brought down to 39 per cent by May 2008. It was once again increased at the start of the market rally in March 2009 and went up to 60 per cent by September 2009.
The flexibility also extends to its changing composition. Its equity allocation was brought down to 55 per cent in December 2008 but once the market rallied, it rose to 75 per cent (May 2009). Over the past year it has averaged at around 69 per cent. The fund's mandate permits the equity allocation to fluctuate between 50 and 75 per cent of its assets, and it has always stayed within that limit.
When Nishit Dholakia and Satyabrata Mohanty took over in June 2009, changes were apparent in the fund. A lot of shuffling took place in sector bets while the number of stocks rose significantly to touch 60. The fund is fairly diversified and single sector allocation has rarely crossed 16 per cent since 2006. The fund managers have taken a contrarian stand as far as Energy sector is concerned. With a meagre 5 per cent allocation, it is nearly half the category average.
On the debt side, the portfolio has always been skewed towards bonds and debentures as well as G-Secs. Over here it will not be surprising to find aggressive maturity bets should the need arise. In 2008, for instance, the average maturity of the portfolio was moved up from 3.59 years (November) to 10.35 years (December). Recently, the fund manager has been taking exposure to Certificates of Deposit (CDs) though he has been known to stay away from both CDs and Commercial Paper (CP).
