 "Fund pick: Birla Sun Life Top 100 Fund")
Launched in October 2005, Birla Sun Life Top 100 Fund is classified in the large cap-oriented equity 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 10 quarters since June 2011, except for one quarter (December 2011).
The fund has average assets under management (AUM) of Rs 3,276 crore for the quarter ended December 2013. It is managed by Mahesh Patil, co-chief investment officer, since July 2010.
Investment objective
The scheme’s objective is to provide medium- to long-term capital appreciation by investing predominantly in equity and equity-related instruments with minimum 65 per cent exposure to top 100 companies as measured by the market capitalisation.
The fund has maintained large cap bias with an average equity exposure of 83 per cent to CRISIL-defined large cap (top 100 stocks based on nine-month daily average market cap on NSE) stocks over the past three years ended January 2014.
Performance
The fund has consistently outperformed its benchmark (CNX Nifty) and category across various time frames. The fund posted annualised returns of 19 per cent over a five-year period compared to 17 per cent and 16 per cent by the category and the benchmark respectively. Since inception, the fund outperformed the benchmark 81 per cent of the times over a five-year period on a daily rolling return basis.
Also, the fund (19.43 per cent) has lower volatility compared with the benchmark (21.68 per cent). Thus, the fund has been able to generate superior returns at comparatively lower volatility.
The fund has also outperformed its benchmark across market phases. During the bear phases of 2008 sub-prime crisis and the European crisis, the fund outperformed its benchmark by 0.5 per cent and 2.66 per cent, respectively. Further, during the sharp market recovery from April 2009 to December 2010 post the sub-prime crisis, the fund generated excess returns over benchmark of 2.85 per cent. Also, in the period after the European crisis (until February 12, 2014), an alpha of 6.87 per cent was generated by the fund. Thus, the fund not only limited the downside but also captured the upside during various market phases.The fund has average assets under management (AUM) of Rs 3,276 crore for the quarter ended December 2013. It is managed by Mahesh Patil, co-chief investment officer, since July 2010.
Investment objective
The scheme’s objective is to provide medium- to long-term capital appreciation by investing predominantly in equity and equity-related instruments with minimum 65 per cent exposure to top 100 companies as measured by the market capitalisation.
The fund has maintained large cap bias with an average equity exposure of 83 per cent to CRISIL-defined large cap (top 100 stocks based on nine-month daily average market cap on NSE) stocks over the past three years ended January 2014.
Performance
The fund has consistently outperformed its benchmark (CNX Nifty) and category across various time frames. The fund posted annualised returns of 19 per cent over a five-year period compared to 17 per cent and 16 per cent by the category and the benchmark respectively. Since inception, the fund outperformed the benchmark 81 per cent of the times over a five-year period on a daily rolling return basis.
Also, the fund (19.43 per cent) has lower volatility compared with the benchmark (21.68 per cent). Thus, the fund has been able to generate superior returns at comparatively lower volatility.
A lump sum investment of Rs 1,000 in the fund at the time of its launch (October 24, 2005) would have grown around three times to Rs 2,755 as on February 12, 2014 (annualised returns of 12.99 per cent) vis-à-vis Rs 2,741 (annualised 12.92 per cent) in the category and Rs 2,540 (annualised 11.89 per cent) in the benchmark.
A monthly systematic investment plan (SIP) of Rs 1,000 for five years would grow to around Rs 77,939 for a principal investment of Rs 60,000, delivering an annualised return of 10.6 per cent. Again, it has outperformed its benchmark across timeframes (one-, three-, five-, seven – years and since inception).
Portfolio analysis
Over the past three years, the fund manager has actively managed the portfolio in response to market volatility. During 2011, when the benchmark gave negative returns, the fund had lowered its average equity exposure to around 92 per cent; the lowest level being 87 per cent in November 2011.
Subsequently, when the market started recovering from May 2012, the average equity exposure was increased to 95 per cent (highest being 98 per cent in July 2012). Over the three-year period ended January 2014, the fund has maintained around 94 per cent exposure to equity and equity-related instruments.
The fund is well diversified at both stocks as well as sector level. The fund held an average of 55 stocks in its portfolio compared with the category’s 41 stocks during the three years ended January 2014. Top 10 companies constitute 38 per cent of the fund whereas the category average is 50 per cent. Also, the top five industry exposure is 52 per cent as compared with the category’s 59 per cent.
At the sectoral level, compared to the benchmark, the fund was underweight on banks and petroleum products, which gave -1.28 per cent (CNX Bank Index) and -3.75 per cent (S&P oil and gas), and overweight on pharma, which gave 18 per cent (CNX Pharma Index) over the three-year period compared with the CNX Nifty’s 3.41 per cent. Thus, underexposure to these underperforming sectors and vice versa has helped the fund in its performance.
CRISIL Research