Aditya Birla Sun Life Conglomerate Fund NFO: Should You Invest?

The Aditya Birla Sun Life Conglomerate Fund NFO opened for subscription on December 5, 2024, and will be available to the public until December 19, 2024.

This scheme will focus exclusively on India's top promoter-led conglomerates. Conglomerates are promoter-led groups domiciled in India with at least two listed companies operating across different industries. A few examples of conglomerates are Tata Group, Reliance , Adani, Bajaj and the Aditya Birla Group.

Here's a detailed look at what the fund offers and whether it aligns with your investment goals.

Aditya Birla Sun Life Conglomerate Fund NFO: Investment strategy

Aditya Birla Sun Life Conglomerate Fund's investments can span across 22 sectors. It can choose stocks across 36 large caps, 30 mid caps and 103 small-cap companies, as per the scheme document.

However, it won't invest more than 25 per cent of investors' money in any one conglomerate. This way, the fund will ensure exposure to at least four conglomerates to reduce risk.

Performance outlook

The Aditya Birla Sun Life Conglomerate Fund is an actively managed thematic fund with no direct rivals. It's a first of its kind.

The fund's returns will depend on the fund managers' ability to execute the strategy. While it is impossible to predict the fund's performance, we can take cues from its benchmark, the BSE Select Business Groups Index.

The benchmark has delivered an annualised return of 27.7 per cent over the last five years and 17.7 per cent over the last 10 years based on backtested data. These figures provide a glimpse into the historical potential of the conglomerate universe. However, as this data is backtested, it may not necessarily reflect the fund's future performance.

Currently, the BSE Select Business Groups Index leans heavily on giants like Reliance Industries (11 per cent annualised returns in the last five years), Mahindra & Mahindra (42 per cent), TCS (16.4 per cent) and Ultratech Cement (23.6 per cent).

While these companies can also be a part of the ABSL Conglomerate Fund's portfolio, they may not occupy such a significant presence as the fund aims to have a broader diversification.

Fund managers' track record

The fund will be managed by Harish Krishnan and Kunal Sangoi, both seasoned professionals with extensive experience in equity markets.

Krishnan brings over 20 years of expertise in managing domestic and international equities, while Sangoi has 18 years of experience in equity research and portfolio management. They both manage several prominent funds at Aditya Birla Sun Life Mutual Fund.

Our take

The Aditya Birla Sun Life Conglomerate Fund offers an opportunity to invest in India's leading business houses. Its focused approach may appeal to optimistic investors seeking exposure to promoter-led groups with strong growth potential. However, thematic funds like this come with notable risks.

For most investors, flexi-cap or multi-cap funds may be a better fit, offering simpler structures, strong track record and decent exposure to conglomerates. On average, their exposure to conglomerates like Adani, Aditya Birla, Bajaj, Godrej, Reliance and Tata is around 16 per cent.

However, if you have a strong conviction in conglomerate-specific funds, you may allocate a small portion of your portfolio to thematic funds like the ABSL Conglomerate Fund.

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Also read: Ask these three questions before investing in an NFO