Birla Sun Life 95: Buy :: Business Line

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The fund stays on top by taking right calls on the direction of the equity and debt markets

Is the ongoing volatility and correction in the markets prompting you to look for safer funds to bet on? Birla Sun Life 95 (BSL 95) could fit the bill.

Being an equity-oriented balanced fund, it pegs down the risk by investing a portion of its holdings in debt at all times. The latest portfolio, for instance, has only about 74 per cent in equities, while instruments such as corporate debentures and government securities make up the rest of the holdings.

At the same time, the fund doesn’t disappoint on returns. In the market rally of the last one year, the fund clocked about 47 per cent returns, in line with some established large-cap funds such as HDFC Top 200 and UTI Equity.

The fund stays on top by taking right calls on the direction of the equity and debt markets. In 2014, for example, the fund capitalised on the opportunity in gilts early on. It pushed up its government securities holdings by up to 12 per cent during the year, from only half of that in January 2014.

Timely addition of exposure to cyclical sectors such as auto, banks and capital goods also gave returns a leg-up.

Similarly, it latched on to the 2009 upswing at the appropriate time, quickly redeploying cash into equities.

By May 2009, equity holdings moved up to 75 per cent from the 55 per cent levels seen in late 2008. This helped the fund beat its category average by over 10 percentage points in the rally that year.

The fund also tends to increase mid-cap exposure in rallies to boost returns.

BSL 95’s record on market dips is also noteworthy. It shielded itself in the 2011 market fall better than peers such as HDFC Prudence, by stepping up exposure to corporate debentures which offered attractive yields at that point in time. It also handled the volatile markets of 2013 better than HDFC Prudence. Overall, BSL 95 has outperformed its category average by 6 to 20 percentage points over one-, three- and five-year periods.

Portfolio

In tune with the current market mood, its recent portfolio has a tilt towards cyclicals. Banks, software and automobiles are the preferred sectors with stocks such as HDFC Bank, ICICI Bank, HCL Tech, Tata Motors and Maruti Suzuki among the top holdings. Since the beginning of 2014, mid-cap exposure has gradually doubled to 20 per cent of the portfolio now. But it holds quality names such as Persistent Systems, Finolex Cables, Raymond and KEC International.

On the debt side, the fund usually plays it safe by choosing AA and AAA rated instruments. Corporate debt of Hindalco, LIC Housing Finance and IDBI Bank is part of the latest portfolio.