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Conscious Bets

The Birla Sunlife MIP fund has managed to be a good achiever, producing double figure returns for the past 2 years. And with its stellar track record in bear phases, the fund is a core holding

Stellar track record in bear phases makes it apt for core holding

The fund's recent performance is challenging its low risk - low return tag. Earlier known as Alliance MIP, the fund was taken over by Birla Sun Life, which has traditionally been proficient in the fixed income space. The fillip to the fund's return grade came from the robust performance over calendar year 2006 and has continued into 2007 as well. In fact, the fund has produced double digit returns in line with its aggressive peers, in spite of maintaining a lower equity allocation, limited at 15 per cent.

A look at the equity holdings reveals that the fund is extremely conscious of valuations. This is probably why, since June 2006, the fund has been more focused on mid-cap companies. The fund also toes the buy-and-hold strategy, occasionally building or trimming its position in individual scrips.

On the debt side too, the fund management is exceedingly conscious of credit risks. To a large extent this stems from the fact that the fund has been around since 1999, and has witnessed many credit cycles. This also explains why, unlike its peers, the fund has not ventured aggressively into AA and below rated paper.

As of now, in line with the general trend, the fund too has extended the maturity of its holdings to profit from a possible downward revision in interest rates. The fund has moved away from government securities in favour of corporate bonds to extract better yields. As far as dividends go, the fund is definitely consistent in declaring these; however, the quantum of these dividends sways in a wide range.

Even though the fund has performed rather well recently; don't always expect the fund to come on top during an equity rally. With a stellar track record in bear phases we would recommend the fund as a core holding for conservative investors looking at a spot of equity exposure.