FUND PICK: Birla Sun Life Frontline Equity Fund

Outperformer across mkt cycles

Launched in August 2002, Birla Sun Life Frontline Equity Fund is classified in the large-cap category of the CRISIL Mutual Fund Ranking. The fund has been ranked in the top 30 percentile (CRISIL Mutual Fund Rank 1 or 2) for past 20 quarters since December 2009 (except December 2011). The fund, managed by co-chief investment officer Mahesh Patil, has assets under management of Rs 6,404 crore as of the quarter ended September 2014.

The fund's investment objective is to generate long-term growth of capital through a portfolio with a target allocation of 100 per cent equity by aiming at being as diversified across various sectors as its chosen benchmark index, S&P BSE 200.

Performance
The fund has consistently outpaced its benchmark (S&P BSE 200) and category across the short and long terms. It posted annualised returns of 20.69 per cent for 10 years against the benchmark's 14.51 per cent and category's 17.56 per cent returns as on December 17, 2014. The fund has delivered annualised return of 24.67 per cent and above since its inception in August 2002. The fund has not only successfully beaten its benchmark in the bull phase, but also stayed resilient and cushioned the fall in the bear phase. During the sub-prime crisis in 2008 (December 31, 2007 to March 31, 2009) when the markets tanked, the fund capped its downside, giving returns of -41.76 per cent against the benchmark's -49.18 per cent and the category's -43.84 per cent. In the bull phase, following the sub-prime crisis (March 31, 2009 to December 31, 2010), the fund delivered 60.30 per cent against S&P BSE 200 Index's 57.67 per cent and the category's 53.35 per cent. During the European crisis (from December 31, 2010 to June 30, 2013), too, the benchmark and the category gave negative returns of -3.41 per cent and -1.03 per cent, respectively, while the fund delivered positive returns of 1.05 per cent.

A lump-sum investment of Rs 1,000 in the fund at the time of its launch would have grown to Rs 15,082 by December 17, 2014 vis-à-vis Rs 12,448 in the peer group and Rs 8,725 in the benchmark. The fund has also outperformed in SIP returns vis-à-vis its benchmark across time frames.

Portfolio analysis
Predominantly a large-cap stocks oriented fund, it has had a well-diversified portfolio with an average of 67 stocks versus the category's 44 in the past three years ended October 2014. Among the 27 stocks that are part of the portfolio for over the past three years, the top contributors are HCL Technologies (53.55 per cent annualised returns), Tata Consultancy Services (32.67 per cent), IndusInd Bank (35.89 per cent), Lupin (42.75 per cent) and Sun Pharmaceutical (49.60 per cent).

Over the past three years, the fund's sector exposure is in line with the peer group. It has had the highest exposure to banking (18.74 per cent), software (12.37 per cent) and consumer non-durable (9.16 per cent) sectors in the past three years ended October 2014. These sectors have registered higher annualised returns of 19.48 per cent, 21.76 per cent, and 22.02 per cent, respectively, against the benchmark's 16.30 per cent during the same period. As far as risk measures are concerned, the scheme has done well with a Sharpe ratio of 1.56 per cent against the benchmark's 1.09 per cent and the category's 1.26 per cent.