Birla Equity Plan has come a long way since inception to emerge as a category beating fund. Barring one year, the fund has consistently beaten the category returns over the past five years.
The fund manager churns the portfolio quite aggressively. He moves swiftly in and out of sectors spotting opportunities and strategically timing his entry and exit. Good stock picks have in fact become the USP of the fund. For instance picks such as Automobile Corporation of Goa have delivered significant returns for the fund at a time when the auto sector has been in the grip of bears. In fact the fund has maintained its position in the automobile sector at a high of 13 per cent through this bear phase while the average category exposure to the sector has hovered around 7 per cent.
The fund has displayed an uncanny ability to sense an opportunity at the right time. It did so during the third quarter of 2006 by timing its entry in the banking stocks to perfection.
In spite of such a churn, the volatility in returns is below average. The fund manager prefers to hold a small portfolio of around 35 stocks in which he invests with conviction. Moreover each of these holdings accounts for over 1 per cent of the portfolio. This in turn means that each stock has a significant impact on the fund's returns.
So far 2007 looks good for the fund - the year to date return as on June 8 stood at 8 per cent compared to the category average 4.11 per cent.
Another refreshing difference in the portfolio is the lower than average allocation to the technology sector. Those of you who have a tech heavy portfolio and are looking for a tax-planning fund to balance such a discrepancy can definitely look at Birla Equity Plan.