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Fund Analysis: Birla SL Top 100 Fund
Fri, Jun 17, 2016
Source : Jeni Shukla, Citrus Interactive

Birla SL Top 100 Fund is an open ended large-cap oriented equity diversified fund. The fund seeks to medium to long-term capital appreciation, by investing predominantly in a diversified portfolio of equity and equity related securities of top 100 companies as measured by market capitalization. The fund was launched in October 2005 and is benchmarked against the Nifty 50 Index. The fund has an AUM of Rs. 1,879 crores as on April 30, 2016, which has gone up by Rs. 417 crore in the last 1 year (AUM in April 2015 was Rs. 1,462 crore). 

 

Performance:

Birla SL Top 100 Fund has outperformed its benchmark Nifty 50 since inception and in the last one-, three- and five-year periods. However, in the year-to-date (YTD) and last 6 months period it has shown a marginal underperformance. It has done better than the equity diversified category in all the periods highlighted in the table below, except in the three-year period.

 

6 Months

YTD

1 Year

3 Years

5 Years

Since Inception

Birla SL Top 100 Fund

2.53

2.64

0.32

19.49

13.81

14.81

Nifty 50

2.83

2.69

-3.24

10.87

7.97

12.25

Category Average

0.36

0.14

-0.63

20.38

13.36

NA

Rank

34/156

31/159

57/155

65/142

52/133

NA

Figures are in % as on May 31, 2016; Returns above 1-year in Compounded Annual Growth Rate (CAGR)

In terms of calendar year returns the fund has shown good consistency in terms of beating its benchmark in each of the last 5 years. It generated returns higher than the category average in 2011, 2012 and 2013 but in the last 2 calendar years it has underperformed the category. A part of the relative underperformance is because mid caps exhibited a strong rally in both the years and the fund is large cap focused.

Scheme Name

2011

2012

2013

2014

2015

Birla SL Top 100 Fund

-21.6

36.36

9.15

48.91

-0.05

Nifty 50

-24.62

27.7

6.76

31.39

-4.06

Category Average

-23.85

34.15

5.43

54.07

3.69

Rank

37/132

46/137

30/141

74/144

112/152

All figures in %

Risk: In terms of measures of risk such as standard deviation and beta (measured over last three years), the fund has taken higher risk compared to the category median.

 

Standard Deviation

Beta

Birla SL Top 100 Fund

1.00

0.94

Category Median

0.96

0.89

Risk-adjusted Returns: In terms Treynor and Sharpe ratio (measured over last three years), the fund has provided lower risk-adjusted returns than the category median.

 

Treynor

Sharpe

Birla SL Top 100 Fund

0.06

0.06

Category Median

0.07

0.07

 

Portfolio Characteristics:

Sector Concentration:  The fund’s concentration in the top 3, 5 and 10 sectors is higher than the category median highlighting lesser risk of the fund.

 

Top 3

Top 5

Top 10

Birla SL Top 100 Fund

40.76

53.79

70.39

Category Median

36.22

48.98

71.34

 

Company Concentration: The concentration of funds in top 3, 5 and 10 companies in its portfolio is lower than the category median highlighting lesser risk of the fund.

 

Top 3

Top 5

Top 10

Birla SL Top 100 Fund

16.85

24.27

39.64

Category Median

19.98

28.99

46.61

 

Number of equity holdings: The fund currently holds 71 stocks in its portfolio (April 30, 2016), which is much higher than the median stock count for the diversified-equity category, which currently stands at 46. Based on equity count the fund runs a highly diversified portfolio compared to its peer set. Over the past five years the fund has always had a diversified portfolio with the number of equity holdings over this period averaging 60.

Thus, based on criteria such as equity count, sector concentration and company concentration, one can conclude that the funds maintain a highly diversified portfolio.

Cash allocation: Its cash allocation at the end of April 2016 was 3.74 per cent. The average cash allocation for last five years is 4.94 per cent. Its maximum allocation to cash over last two years was 8.99 per cent in June 2014 and lowest was 0.57 per cent in February 2015.

Portfolio Insights: The top 5 sectors include Private sector Banks, IT – Software, Pharmaceuticals & Drugs, Refineries and Power Generation/Distribution.

The fund’s exposure to cyclical stocks currently is 65% followed by Services with 16% and Defensives with 14%. The Top five holdings are HDFC Bank, Infosys Ltd., Reliance Industries Ltd., ITC Ltd. and HCL Technologies Ltd.

In the last six months the fund has bought stocks of NTPC Ltd., Crompton Greaves Consumer Electricals Ltd., DLF Ltd., Cipla Ltd., Torrent Pharmaceuticals Ltd., Dabur India Ltd., Sun TV Network Ltd., Tata Steel Ltd. and Tata Power Company Ltd.

Stocks of Cadila Healthcare Ltd., SBI, Apollo Tyres Ltd., Eicher Motors Ltd., Jet Airways (India) Ltd., Motherson Sumi Systems Ltd., Oil India Ltd., Shriram Transport Finance Company Ltd. and Bank of India have been dropped from the portfolio.

The stock of HDFC were added in the portfolio but then dropped. 

 

Process:

At least 80% of the assets will be invested in equity and equity related securities. Out of this at least 65% will be invested in top 100 companies by market capitalisation. Securities listed on NSE shall be considered to determine the top 100 market capitalization companies. A maximum 35% can be invested in other than top 100 companies. Upto 20% can be invested in Debt and Money Market instruments. The scheme may invest upto 25% of its net assets in ADRs/GDRs and equities of listed overseas companies.

Stock Selection Strategy:

The Fund will select stocks from within the investment universe based on its internal analysis based on the following criteria:

             Visionary & Trustworthy management with Established Track record

             Nature and Stability of businesses

             Prospects for future growth and scalability

             Financial discipline and returns as measured by ratios like Return on Investment and Return on Equity

             Valuations in relations to broad market and expected growth in earnings

The fund’s expense ratio is 2.36% which is slightly higher than the category average of 2.32%. Like most equity funds the fund has an exit load of 1 per cent on or before one year from the date of investment. Minimum investment in the fund is Rs. 5,000.

 

Fund Managers:

The fund is managed by Mahesh Patil – who is the Co-Chief Investment Officer at Birla Sun Life AMC. He has over 20 years of experience in fund management, equity research and corporate finance. Prior to joining BSLAMC, he has worked with Reliance Infocom Ltd. in Business Strategy. Other funds managed by him include Birla SL Frontline Equity Fund, Birla SL Pure Value Fund and Birla SL Infrastructure Fund. He has a very good track record in fund management.

 

View:

The Birla SL Top 100 Fund has a consistent track record of beating its benchmark in most time periods. A diversified portfolio and good fund manager track record are other favourable attributes. The fund might not be an outperformer compared to peers in a rally but it strives to do better than Nifty in most time periods. It can be considered for the large cap allocation of the portfolio.

 
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