Flexible and savvy

BIRLA SUN LIFE MIDCAP PLAN A
It started as a middle-of-the-road performer and began to take on competition in 2006 because of its sector selection. Last year, the scheme earned 120 per cent, 22 per cent over its category.

Though the portfolio is churned frequently, it avoids concentration. Since 2005, no sector, the scheme invested in, has breached the 20 per cent mark, nor has a single stock crossed 6 per cent allocation. Therefore, the portfolio is sometimes packed with as many as 65 stocks. But, that could also be due to portfolio transition. When the scheme shifts between themes (like defensive or growth), it takes time to offload those stocks.

In 2008-end, the fund was heavily into debt, which it offloaded completely in early 2009 and moved into cash. Just before the 2009 rally, its large-cap allocation was 25 per cent and then dropped to just one per cent in two months.

This fund earns during rallies, but, does not stray drastically from the category average during downturns. The good part is that the investors are rewarded in the long-run. In the 3- and 5-year period, it returned 18 per cent (category average: 8 per cent) and 28 per cent (category average: 21 per cent), respectively, as of 31December 2009.

The scheme invests 65-100 per cent in equity and related instruments. Stocks with market capitalisation of Rs 150-1,500 crore are looked at. And, up to five per cent in put into cash, deposits and money market instruments, including Mibor-linked short-term paper.

IDFC PREMIER EQUITY PLAN A
The fund looks for small and medium sized businesses with good long-term potential and cheap valuations. Its equity component would be in the range of 65-100 per cent.

This fund has underperformed the category average only in three quarters. In 2007, it trounced the competition, with 110 per cent return (category average: 64 per cent). In the subsequent bear phase, it shed 54 per cent (category average: minus 62 per cent). Its 3-year trailing returns of 25.85 per cent (31 December, 2009) makes it the best performer among its peers.

The fund boldly rides on sector bets and does not shirk from taking contrarian stands; its bias is towards services since inception and restrains from going heavy on energy. In 2007, the fund did not get into metals. That year, the BSE Metal Index returned 121.47 per cent and the fund returned 46 per cent more than the category average.

This scheme attempts to capture shifts in the business environment with regard to new business opportunities, technologies and trends, with a focus on small companies. The fund maintains a tight portfolio across 29 stocks (1-year average) and their allocation does not cross seven per cent, barring Shree Renuka Sugars and Exide Industries.

This fund tends to maintain a relatively higher debt/cash allocation. This is a good stance, since companies in this segment are not very liquid and it has to ensure ample liquidity for redemptions, so as not to touch the entire portfolio.
 

	Trailing Returns (%)
	1-month	3-month	1-year	3-year	5-year
Birla Sun Life Mid Cap Plan A	-5.23	8.93	133.09	14.02	26.34
IDFC Premier Equity Plan A	-0.86	14.24	120.31	22.38	-
Sundaram BNP Paribas S.M.I.L.E.	-7.8	5.19	130.22	15.14	-
Returns as on 4th January 2010

SUNDARAM BNP PARIBAS SMILE
This scheme invests at least 65 per cent in mid- and small-caps. The balance can be in other equities, including American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). Small- and mid-caps are defined as equity stock with market capitalisation equal to or lower than that of the stock with largest market capitalisation in the CNX Midcap 200 Index.

Its return of 81 per cent (category average: 64 per cent) in 2007 and 120.44 per cent (category average: 98 per cent) in 2009, got noticed. Its savvy sector bets helped the fund.

The fund shirks debt and prefers cash. Interestingly, the fund delivered impressive returns during the latest rally (March 9-December 31, 2009), though cash exposure averaged at around 14 per cent between February and April. Only from May, after the election, was the fund more or less fully invested. It rode on all the economically sensitive sectors like financials, industrials, consumer discretionary and commodities, which paid off well.

With this offering, you can be sure of ample diversification amongst sectors, as well as stocks. Over the past year, the number of stocks has averaged 53, a considerable change from its earlier days, when it touched 96.

While around 40 per cent of its investment universe comprises of stocks that have been held in the portfolio for less than six months, many have been held for considerable lengths of time. It's worth noting that in most stocks, the fund offloads positions completely before buying afresh.

Despite riding the bull run well, it did not give a headline grabbing return in 2006 or 2008, but was a category beater. Its 3-year trailing return of 19 per cent (category average: 8 per cent) as of December 31, 2009, speaks for itself.