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.
