Birla Sun Life Top 100 Fund: Invest :: Business Line

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Investments can be considered in the units of Birla Sun Life Top 100 Fund (BSL Top 100). BSL Top 100 is a large cap fund that predominantly invests in the BSE100 Index’s constituents.

Having been a laggard during the initial years, the fund’s fortunes revived over the last three years .

BSL Top 100 returned an annualised 6.7 per cent in the last three years, a good 3.4 percentage points more return than its benchmark CNX Nifty Index. The fund generated 12.8 per cent annualised returns over the last 7 years compared with 11.6 per cent returns of the Nifty index.

SUITABILITY

BSL Top 100 focuses on bluechip stocks and is suitable for investors with a relatively lower risk appetite. Large-caps may be a preferred vehicle in the current volatile market environment.

The fund contained downside better than its benchmark during most market corrections.

The volatility of the fund is lower than the passively managed index, with a beta of close to 0.85.

To reap benefits from the fund, ideally, the holding period should be around five years. The systematic investment route should be the preferred mode of investment as this route gives far superior performance to lumpsum investing during times of volatility. For instance, the fund generated an annualised 11 per cent return through systematic investment route in the last five years. In contrast, the five-year return of the fund is 3.3 per cent.

PERFORMANCE AND PORTFOLIO

BSL Top 100 has seen comparatively lower erosion in its NAV during market corrections but on the flip side didn’t participate in market rallies in the past. Shifting to cash during market corrections led to a lag in participation in rallies. The fund hedges some of the stock positions in the derivatives market. This also limits the upside (in addition to the downside).

But during the current rally, which began in December 2011, the fund returned close to 28 per cent — a good 5.6 percentage points over the Nifty. The higher returns can be attributed to higher weights in stocks such as Tata Motors DVR, ICICI Bank, ITC, HDFC Bank, Yes Bank, IndusInd Bank and HCL Technologies.

All these stocks have significantly outperformed the broader markets. Investments in mid-cap IT companies and banking stocks helped the fund perform better.

The fund has a pretty diverse holding with around 50 stocks in its portfolio in addition to derivative positions. Around 87 per cent of the current portfolio is invested in large-cap stocks (Rs 7,500 crore) with 47 per cent of the portfolio invested in companies with market cap of more than Rs 50,000 crore.

The NAV per unit of the growth option is Rs 24.12.