BIRLA SUNLIFE FRONTLINE EQUITY
From being a reasonable performer, this fund started to beat the category average by good margins after 2006.
The fund attempts to hold stocks matching the sector weight of its benchmark - BSE 200 index. But the fund picks up stocks in and and outside the benchmark. The fund is allowed flexibility with sectoral weights: ± 25 per cent in the index or an absolute figure of ± 3 per cent, whichever is higher.
The fund has stuck to its strategy. Though it deviated with energy and engineering (in 2006-07) for it was positive on capital goods, especially power equipment. But it was underweight on energy due to stretched valuations.
In 2009, this fund really came into the limelight, with a stellar performance of 90.45 per cent (category average 80.29 per cent). Due to higher returns, it was sought by a large number of investors and its assets under management (AUM) grew substantially. Then the fund diversified from 35 to 60 stocks in one year.
However, the portfolio still remains concentrated. Apart from Reliance Industries, Bharti Airtel and Infosys, no stock has accounted for more than 5 per cent in the last two years. And, concentration of the top five stocks has been lowered to around 18 per cent.
| Trailing Returns | |
| Period |
Return (%) |
A large-cap thrust in a diversified portfolio and higher than average returns at a lower risk helps this scheme.
HDFC TOP 200
In the last five years, this fund has been the best performer in its category with an annualised return of 27 per cent (as on 31 July).
In the bear phase of 2008, it shed 45 per cent, 11 per cent less than its benchmark and 8 per cent less than the category average. This, without high debt or cash calls.
In the bull run of 2009, this fund beat the category by a staggering 14 per cent. Lower cash levels, overweight on automobiles and banking (raised exposure to State Bank of India which jumped) and underweight on power utilities and energy (cut exposure to RIL which underperformed) helped.
The scheme was an average performer in 2006 and 2007. High exposure to defensives in 2006 and offloading energy in 2007 hit the fund. Higher exposure to financials instead of metals, construction turned out to be wrong in 2007. But investors who stuck around were rewarded in the following years.
The fund primarily invests in companies that comprise the BSE 200 index. But, the fund can invest in the top 200 firms by market capitalisation on the Bombay Stock Exchange (BSE), also.
The fund sticks has managed to hold a consistently qualitative portfolio. It invests in quality businesses, keeps away from richly valued investments to the extent viable and remains diversified. Its long-term performance under a highly skilled fund manager is what makes this scheme highly suitable for all kinds of investors.
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| Period |
Return (%) |
UTI OPPORTUNITIES
In March 2007, this fund was in doldrums. It had underperformed its benchmark and category by huge margin in its initial days (delivered only 11 per cent in 2006). Over the three-year period ended July 31, 2010 this scheme's annualised returns of 14.37 per cent made it the second best performer in its category. These returns are more than double of its benchmark's 6.09 per cent and category average's 6.24 per cent.
The fund scouts for opportunities depending on the macro-economic outlook. Hence it shifts between sectors dramatically. Its strategy is to hold onto a sector until there is a huge valuation gap between that sector and the market. On the other hand, it looks out for some fundamental development, which is negative in the sector leading to a sell-off or shift sectors if some other one looks good.
At any given point in time 65-75 per cent the fund's portfolio is made up of four to five sectors that the fund manager believes will outperform the broader market in the short to medium-term. The portfolio has a 70 per cent large-cap tilt and averages around 40 stocks.
| Trailing Returns | |
| Period |
Return (%) |
| 3-month | 5.94 |
| 6-month | 14.94 |
| 1-year | 21.92 |
| 3-year | 15.31 |
| 5-year | 19.49 |
The fund manager also resorts to high cash levels but that doesn't imply that he isn't fully invested. It means that he has exposure to derivatives, which is either done to hedge part of the portfolio or employed for reverse arbitrage trades. Another reason for this is that entry and exit is easier in the futures market because of higher liquidity.
Overall, the fund has seen its ups and downs, but has managed to do what it set out to achieve - earn money for the investors.
