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Impressive Track Record

Birla Sun Life 95 boasts of a competitive track record with only three out of 15 years of underperformance…

One of the oldest in its category, it has underperformed the average just thrice in 15 years. Naturally over the long term it translates into a very competitive track record. Over the past 15 years ended May 31, 2011, the fund has delivered an annualized return of 26 per cent.
Ironically, most equity funds have failed to deliver such a performance. Out of the total 26 open-end equity funds that have been around for 15 years, only three have outperformed this fund.

The fund has been flexible in investing across market capitalizations. Right up to 2002 it was biased towards large caps. Exposure to mid caps began from the rally in 2003 and by October 2007 the large-cap exposure of the fund dropped to as low as 30 per cent. It was moved up to around half of the fund’s portfolio in 2008 but when the market started to rise in 2009, the fund lowered its large-cap exposure again. It is only recently that the fund has moved up its exposure to large caps to 63 per cent (April 2011) from around 40 per cent in September 2010.

The fund has been quick in changing its composition. Its equity allocation has moved between 55 per cent (December 2008) to touch 75 per cent by May 2009 as the market picked up. Over the past one year it has averaged around 67 per cent. “The asset allocation decision is dynamic and varies based on the fund managers’ view on each asset class. We use indicators like bond yield vs dividend yield, view on inflation, interest rates and other relevant indicators including risk return trade off to decide on asset allocation,” says Satyabrata Mohanty, Head - Multi Asset Investments.

The portfolio of the fund looks much more diversified after Nishit Dholakia and Satyabrata Mohanty took over in June 2009. The number of stocks have increased substantially while allocation to the top five holdings has become more subdued. Currently the fund holds 54 stocks and the allocation to top five is 14 per cent (second lowest in the category). They also did a lot of reshuffling on the sector allocations.

On the debt side, unlike most of its peers, the portfolio is managed much more actively. The fund has largely preferred bonds and debentures and has not hesitated in taking higher maturity bets. For instance, in the last quarter of 2008 when the yields started going down, the average maturity of the fund’s portfolio went up to 10.31 years (December 2008). That quarter, the fund lost just 8.29 per cent (category average: -15.78%).
It invests intermittently in GOI securities and in CDs and debentures