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

Surrender ULPPs

  ICICI Pru LifeTime and ICICI Pru Lifestage are Unit Linked Pension Plans. Such insurance linked retirement plans are neither good investments nor do they offer sufficient insurance cover. As you can see, these have turned out to be bad deals. In the Lifetime plan, the fund value is not even equal to the total premiums that you have paid and in the Lifestage plan your return is just about 6% which is quite low. The mortality charges are as per your age which is why they have increased. Moreover, once these plans matures, you will have to compulsorily opt for annuity (regular income) and the annuity rates are generally modest. Assuming these plans mature in the next one year, it will be wise to surrender the plan now and curb your future commitments.   Before you choose to buy a term plan, you have to consider a few points. You need to insure yourself, only during the time you are working and your family is financially dependent on you. At the age of 59, not all insurance companies w...

ICICI Pru Constant Maturity Gilt dividend

Invest ICICI Prudential Constant Maturity Gilt Fund Online ICICI Prudential Mutual Fund   has announced dividend under the following schemes: Scheme Dividend ( R /unit) ICICI Pru Constant Maturity Gilt-DQ 0.26543239 ICICI Pru Constant Maturity Gilt Direct-DQ 0.27171609 ICICI Pru Q Interval Plan I-D 0.10617296 ICICI Pru Q Interval Plan I Direct-D 0.10703967 ICICI Pru Q Interval Plan I Ret-D 0.10617296             The record date has been fixed as June 13, 2016.   ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in india for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) ...

NPS Investment Choice for Safe Investors

Invest NPS Online       Whether they invested through SIPs or put in a lump sum amount, risk-averse individ uals have earned the highest returns. These are investors who stayed away from stocks and divided their NPS corpus between G class gilt funds and C class corporate debt funds. On average, gilt funds have given 9.75% annualised returns while corporate debt funds have churned out more than 11% in the past five years. As a result, the average return for ultra-safe investors in the past five years is in double digits. Even in the short term, ultrasafe investors have been the biggest gainers among NPS investors. Will the good times continue? The gilt funds of NPS are holding long-term bonds with an average maturity of over 19 years and a modified duration of about 9 years.These funds have done well because interest rate cuts have pushed down bond yields. But experts say this trend will not stay forever. NPS is a long-term investment and the bonds are predominantly held to matu...

Buy Health Insurance Plan even if you are covered with my Employer

Buy Health Insurance Plan Online Yes, getting a private insurance cover now, which extends beyond your retirement age, is recommended There are a few reasons why buying a health insurance plan may make sense even though you get medical insurance from your employer. Here are the points you need to think about. Firstly, your employer's insurance coverage will only protect you as long as you are employed with the company. The policy will terminate when you quit the job or when you retire. Post retirement is perhaps the phase when one needs it the most but you won't have it then. Moreover, buying a new insurance policy after the age of 50 means that there will be no coverage for pre-existing diseases.   Lastly, health insurance policy you get from your employer may or may not cover your dependants. ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver M...

SBI MAGNUM MIDCAP ONLINE

Invest SBI MAGNUM MIDCAP ONLINE   SBI MAGNUM MIDCAP fund didn't fare well in its initial years but, in recent years, has steadily improved its performance under the capable hands of its current fund manager. Although investing predominantly in mid-cap stocks, the average market capitalisation of its portfolio is lower than other category peers.   Although the stock selection approach is mostly bottom-up , the fund manager doesn't shy away from taking bold sector bets , as is reflected in its large exposure to the healthcare sector. She is equally adept at handling performance across market cycles--the fund has captured more of the upside during market upticks and contained the downside during downturns in a better manner than its peers.   Given its superior risk-reward equation, the fund is a worthy pick in its category.     ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing EL...
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