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

Mirae Asset Healthcare Fund

Best SIP Funds to Invest Online   Mirae Asset Global Investments (India) has launched Mirae Asset Healthcare Fund. The NFO of the fund will be open from June 11, 2018 to June 25, 2018. Mirae Asset Healthcare Fund is an open-ended equity scheme investing in healthcare and allied sectors. The scheme will invest in Indian equities and equity related securities of companies that are likely to benefit either directly or indirectly from healthcare and allied sectors. The investment strategy of this scheme aims to maintain a concentrated portfolio of 30-40 stocks. Healthcare is a broad secular theme that includes pharma, hospitals, diagnostics, insurance and other allied sectors. The fund will have the flexibility to invest across markets capitalization and style in selecting investment opportunities within this theme. Neelesh Surana and Vrijesh Kasera will manage this fund. In a press release, Swarup Mohanty, CEO, Mirae Asset Global Inves...

Reliance Regular Savings Fund - Debt Option

Reliance Regular Savings Fund - Invest Online     The scheme aims to generate optimal returns consistent with moderate levels of risk. It will invest atleast 65 per cent of its assets in debt instruments with maturity of more than 1 year and the rest in money market instruments (including cash or call money and reverse repo) and debentures with maturity of less than 1 year. The exposure in government securities will generally not exceed 50 percent of the assets. The fund uses a mix of relatively low portfolio duration with active investments in higher-yielding corporate bonds. It does not take aggressive duration calls but tries to improve returns by cherry-picking corporate bonds. This is reflected in the fund's returns matching the category and benchmark for five years - at 8.4 per cent - but lagging behind the category during a raging bull market in bonds in the last one year. The fund has been a consistent but not chart-topping performer in the income category. Despite its ...

How to Decide your asset allocation with Mutual Funds?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) How to Decide your asset allocation ? The funds that base their equity allocation on market valuation have given stable returns in the past. Pick these if you are a buy-and-forget investor. Small investors are often victims of greed and fear. When markets are rising, greed makes the small investor increase his exposure to stocks. And when stocks crash to low levels, fear makes him redeem his investments. But there are a few funds that avoid this risk by continuously changing the asset mix of their portfolios. Their allocation to equity is not based on the fund manager's outlook for the market, but on its valuations. Our top pick is the Franklin Templeton Dynamic PE Ratio Fund, a fund of funds that divides its corpus between two schemes from the same fund house-the...

How to generate a UAN Online

Best SIP Funds Online   In order to make Employees' Provident Fund (EPF) accounts portable, the Employees' Provident Fund Organisation (EPFO) had launched the facility of Universal Account Number (UAN ) in 2014. Having a UAN is now mandatory if you have an EPF account and are contributing to it. So far, you got this number from your employer and every time you changed jobs, you had to furnish this number to the new employer.  However, in order to make it easier for you to get a UAN , and without your employer's intervention, the EPFO now allows you to go online and generate a UAN on your own. This facility can be used by freshers, or new employees, who are joining the workforce as well as by employees who have older EPF accounts but do not have a UAN as yet. As a new employee, you can simply generate a UAN and provide the number to your employer at the time of joining, when you need to fill up forms for your EPF contribution. As per a circula...

Gifts to relatives will not attract tax

Tax Saving Mutual Funds Online Current open Infra Bond Application form Gifts are always special to the recipient and it would be extra-special if there is no tax payable on these. The taxman believes so, too. In the provision introduced in Section 56 of the Income Tax Act, if any sum of money is received gratis by an individual or Hindu Undivided Family (HUF) during any year, it shall not be taxable if from a relative. The law has already defined the term 'relative' and HUF. However a case that came up before the Income Tax Tribunal shows that some clarifications were still needed. Background The law also exempts gifts during special occasions like marriage of an individual or under a will or by way of inheritance and even in contemplation of death of the payer. Money received as grants or loans from educational institutions/universities, charitable trusts or similar institutions is also exempt. The term relative has been defined in the law to include spo...
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