Birla Sun Life Frontline Equity has never lagged its benchmark in the last 11 years. It has retained a 4-star rating, occasionally moving to 5 stars, for the last nine years.
Strategy: The fund has consistently maintained a higher large-cap exposure than its peers, investing 70-80 per cent of its portfolio in large-cap stocks. It has a 20-25 per cent weight in mid caps and minuscule exposure to small caps. In the last one year, probably due to rising market valuations, the fund has further pruned small-cap exposure and gone overweight on large caps, owning 11-13 per cent more large-cap weight than its peers. The fund pegs its sector weights to those of the BSE 200 index, sometimes selecting stocks outside the index. No change in manager since 2006 has also led to the continuity of style and market-cap bias.
Performance: The fund's decision to cut back on mid and small caps has cost it in terms of relative returns in the last one year. With 34 per cent returns, the fund lags category returns of 36.1 per cent. But it is well ahead of its benchmark return of 26.2 per cent. Three- , five- and ten-year returns still beat the category by a margin. The fund has a particularly good record at containing downside in the falling markets of 2008 and 2011, which has ensured a smoother ride for investors too.
What we don't like: Focus on the BSE 200 index for stock selection may prevent this fund from investing in good mid-cap opportunities outside the index.
Why invest? The fund has been a winner over three different market cycles and is backed by one of the most stable management team in the category.
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