A long-term track record of good performance, proven ability to ride out corrections better than most peer funds and benchmark, and a focussed exposure to blue-chip equities makes Birla Sun Life Frontline Equity Fund an apt investment option.That the fund is among the select few funds to have bettered their respective benchmarks each year in the last five years also adds to its appeal.
The fund’s consistent performance not only lends credence to its ability to spot investment themes on time, it also puts in better light its ability to address downside risks. Over a five-year period, the fund has delivered a compounded annual return of over 26 per cent, which places it among the top few funds in the diversified category.
Suitability: While the fund’s consistent track record makes it a good addition to the core portfolio of MF investors, its typically large-cap intensive portfolio could also restrain its participation in secular rallies. The fund therefore may be best suited for low-risk appetite investors looking for steady returns.
Performance: BSL Frontline Equity Fund’s compounded return of over 90 per cent and 13 per cent over one-year and three-year period puts it above peer funds such as Franklin India Bluechip, Reliance Vision and Sundaram BNP Paribas Select Focus in the returns chart. But what adds more sheen is its ability to arrest downsides.
The fund has consistently performed better than its benchmark, BSE-200 during market corrections.
For instance, be it the brief corrective phases seen in 2004 and 2006 or the long-drawn-out one seen in 2008, the fund’s returns have been better or at par with its benchmark. This particular trait holds higher importance now, what with the markets seen buckling under selling pressure.
The fund’s performance during market upswings however has been a mixed bag of sorts. Attributable mainly to its large-cap focus, the extent of its participation has been limited by its inability to benefit from rallies led by mid-cap stocks – such as the one seen towards the later half of 2007. That said, the fund’s ability to quickly change tack, and in sync with market trends, provides a higher salve. For instance, while most equity funds struggled to mirror market returns in 2009, BSL Frontline despite sporting high cash exposure in the first few months of the year was quick enough to up its equity ante.
Portfolio: More than three-fourth of its portfolio is invested in companies with market capitalisation of more than Rs 7,500 crore. While little under 10 per cent is invested in cash and equivalents, the rest is spread out among select mid and small-cap stocks.
This, however, doesn’t add to the fund’s risk element as no individual stock in this space enjoys a significant exposure. In terms of sector exposure, the top three — energy, financials and IT — make up over 44 per cent of its latest available portfolio (December 2009). HBL
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