Middle-of-the-road Performer | Value Research Birla Sun Life Dividend Yield Plus sports a broad & well-diversified portfolio and has grabbed attention of late
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Middle-of-the-road Performer

Birla Sun Life Dividend Yield Plus sports a broad & well-diversified portfolio and has grabbed attention of late

The current market turbulence has put this fund in a good light. In fact, it has been getting noticed of late simply because it has shown tremendous resilience during this fall.

Normally, one would expect that in a dividend yield fund, but it is surprising when one considers a mid- and small-cap allocation in the range of 77 - 86 per cent over the past nine months. Despite this the fund has managed to provide a cushion for itself in this market downturn.

One reason could be its increased allocation to cash and debt, which historically the fund has not resorted to. Between April - June 2008, the cash allocation averaged almost 15 per cent. The three months leading to September saw it average at 12 per cent in debt.

Since the sector weightages reveal that the fund’s allocation is normally in line with the broad category average, a reason for the middling performance could be the extremely diversified portfolio that it opts for.

In December 2007, for instance, energy and financial services cornered around 37 per cent of the portfolio, on the identical lines as the top performer that year — Tata Dividend Yield. Yet, this fund faltered on performance. Birla played it too safe with no stock exceeding 4.40 per cent, while Tata Dividend Yield had six stocks exceeding that exposure. So when Neyveli Lignite Corporation delivered 350 per cent that year, Tata benefited with a 6 per cent exposure, while Birla with 3.82 per cent. Ditto with GAIL which delivered 105 per cent. Tata had a 4.18 per cent exposure, while Birla had just 1.46 per cent. Stock picking also made a difference. Tata opted for LIC Housing Finance, which gave a return of 135 per cent but Birla opted for Indian Overseas, Vijaya Bank and Allahabad Bank.

While the Assets Under Management have dipped from Rs 732.67 crore (December 2005) to Rs 216.52 crore (September 2008), investors need not worry that it may turn out to be a more concentrated offering. The fund sports a broad and well diversified portfolio of 53 stocks, the highest in the category.

This fund does not fall as much as its peers, but neither does it rise by a huge margin either. It will not disappoint investors who are willing to compromise mind-boggling returns in exchange for a good night’s sleep.

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