Skip to main content

Mutual Fund Review: Birla Sun Life Advantage

 

 

Launched in February 1995, Birla Sun Life Advantage Fund is the oldest diversified equity mutual fund from the Birla Sun Life basket. However, the fund has been overtaken by its newer diversified equity siblings, both in terms of performance as well as growth in assets under management (AUM). Thus, notwithstanding its 15-year long existence, the fund has just about Rs 400 crore of AUM today.

PERFORMANCE

From being one of the top-performers in the late '90s to an average performer since early 2000, Birla Sun Life Advantage Fund has had an eventful record. In fact, in the past five years, the fund's performance has just been more or less at par with its benchmark index - the Sensex.


   In 2005, for instance, the fund returned about 43% against the Sensex gains of about 42% followed by a poor show in 2006 when it returned just about 34% against the Sensex returns of nearly 47% in that year. The fund, however, made a quick come back in 2007 when it outperformed the Sensex returns of about 47% by nearly 10 percentage points. However, despite outperforming the benchmark, it fell short of beating its peers, which, on an average, gave about 59% in 2007. Thus even though Birla Sun Life Advantage Fund has had a decent performance visà-vis its benchmark, the fact that it failed to outperform its peers in one of the most happening years of the decade relatively pushed down its rankings.


   Then again in 2008, the fund was received with yet another blow as it plummeted by more than 58% against the Sensex's decline of about 52%. Here again, at a negative return of 55%, the average decline by the category of diversified equity schemes was less than that of Birla Sun Life Advantage, pushing it down further in rankings and popularity charts.


   The fund, however, has not given up yet and in its attempt to build the blocks in its favour, it managed to return about 87% in the market recovery of last year against 81% returns posted by the Sensex. The diversified equity schemes, on an average, posted 84% gains last year. This year, the fund has so far returned about -5.2% since January against the Sensex returns of -6%.

PORTFOLIO

While the fund is benchmarked to Sensex, it is not an index fund and thus the fund manager has not restricted the portfolio of this fund to Sensex stocks alone. In fact, the fund's latest portfolio composition - as on April 30 2010 - has just about 44% of AUM invested in the Sensex stocks. The fund's beta is thus higher than that of the Sensex. At its current beta of 1.05, Birla Sun Life Advantage's portfolio is 5% more volatile than that of the market. This amply proves the fund's marginal outperformance vis-à-vis the markets in the bullish years and underperformance in the sluggish years.


   As far as the stock composition is concerned, high beta sectors like financial and engineering dominate the fund's portfolio currently while the most popular and in-demand sectors - healthcare and FMCG together account for just about 9% of the fund's equity composition. Within the healthcare sector, the fund has exposure in Dishman Pharma, Cipla and Pfizer. Unfortunately, the portfolio clearly misses out on outperformers such as Lupin and Sun Pharma.


   While most of the fund's current holdings have been invested into in 2009, some like RIL, BHEL and L&T are over four years old. The fund has clearly profited from the advantage of long-term holding in these two stocks, especially, in BHEL and L&T, which have grown multifold since the time they was first acquired by the fund. Its other highly profitable long term investments include - TCS, Infosys, ICICI Bank, United Spirits and Thermax. As such, 82% of the fund's equity portfolio is in the profit zone.

OUR VIEW

Based on its performance so far, Birla Sun Life Advantage can be rated as an average performer whose returns are more or less aligned with that of the market. Investors of this fund can thus satiate their appetite with returns as good or bad as the market. However, those seeking outstanding returns can consider other large-cap equity schemes like the Frontline Equity from the same fund house which has proven to be far better performer than Advantage.

 


Popular posts from this blog

Group Health Insurance

Buy Group Health Insurance Online   For Human Resources, the biggest challenge today is to decide whether medical benefits should be offered to employees or not, what type of plans should be offered, what will be the cost and how will the cost be split between employees and employer. Well, most of these are subjective and would depend on a lot of factors including company size, average employee salary, etc. However, this article will give you a fair idea on how you should go about deciding these factors: 1. Why offer group health insurance benefit to employees : Studies have proved that retention rates among employers offering GHI are much higher than the ones who are not offering. Moreover, the cost of providing this benefit as a percentage of salary is very low as compared to the perceived value. As an example, say if average salary of an employee in your organization is 4 LPA. If you decide to offer a health insurance benefit to him for a Sum insured of ...

ICICI Prudential Dynamic Plan Invest Online

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   ICICI Prudential Dynamic Plan             Invest Online This fund does remarkably well during falling markets, but fails to show the same prowess during a rising market. The fund sticks to its mandate to adapt to the dynamic nature of the market by shuttling between debt and equity. It takes aggressive asset calls in equity when the market surges by investing in quality mid-cap stocks. At the same time, it adopts a defensive strategy by investing in debt and cash when markets get overvalued, making it a good long-term choice.     For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call     Leave a missed Call on 94 8300 8300   Leave your comment with mail ID and we will ...

Birla Sun Life MIP II Savings 5

  Birla Sun Life MIP II Savings 5 - Invest Online   Have you traditionally been a debt investor but now wish to test waters in equities? Then, debt-oriented funds such as Birla Sun Life MIP II Savings 5 (Birla Savings 5), which have limited exposure to equities, may fit your requirement. With a five year return of 10.5 per cent compounded annually, the fund managed a good 3-3.5 percentage points more than its benchmark Crisil MIP Blended Index, as well as its category average. The fund appears well poised to capitalise on a falling interest rate scenario and has increased the average portfolio duration of its debt instruments in recent times. Suitability Birla Savings 5 is suitable only for conservative investors. If you want to make a beginning in equities and cannot take any short-term declines in your stride, then this fund will suit you. If you are already an equity investor and want to use a debt-oriented fund merely as a diversifier, then you may prefer peers from the HDFC and Re...

Why credit history is critical?

Will you need a loan to buy a car or a house? Do you know why some people get their loans sanctioned quickly without any hassle, whereas others find that their approval is delayed or their application is rejected? If you want a loan, you will need to work to build a solid credit history because this can have a bearing on the ease with which you get loans. Read on to learn more about what is a credit history and how to build a good credit score. What is a credit history? Your credit history is a way of tracking your credit behaviour and habits — basically it shows how disciplined and regular you are when it comes to repaying your dues on loans that you have taken. It will show a complete record of your past borrowing and repayment record including details about any late payments or if you have defaulted on a loan. This track record is readily accessible to lenders and is used by them to when reviewing your loan application. Borrowers who have historically had a bad record of managing...

Stock Market Concepts: Derivatives and taxation

DERIVATIVES refer to an instrument, which derives its value from the value of something else — that is, an underlying asset. In India, the derivatives space has traditionally been the playground for large institutional investors who use it for hedging or for speculative activities. However, with time, we have seen a steep augmentation in the per capita income of an average Indian. Consequently, the appetite for investment in alternative instruments has transcended into the need to explore untested territories, and one of the most lucrative of all the available options, is the derivatives. Taxation Of Derivatives: Let's have a sharp overview of how taxability impacts the dealings in futures and options: Futures: Since, there is no transfer or delivery of the underlying asset in case of futures, the income or loss from it cannot be taxed under the head "capital gains". Therefore, depending upon the fact whether the assessee is a trader or an investor, the head of income...
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