In a market starved of exciting developments, let us talk of a fund whose statistics are rather remarkable. Though its 2-year return is a negative 16%, Birla Advantage has clocked a total return of 16% over 7 years and a whopping 5-year return of 23.35%. What better could investors expect from a highly volatile fund such as this? What's more, in the past four years, the fund has consistently been among the top rankers.
For aggressive investors, Birla Advantage is an ideal investment as this fund spread its exposure across diverse sectors, barring in the year 2001. This fund has a knack for spotting opportunities earlier than others and scouts around for large-cap market leaders, with a credible management. The strategy paid off well in 1999, when it clocked a massive 300% return. At that point, FMCG, tech and pharma stocks formed a major chunk of its portfolio. Technology, however, was acquired much ahead of its peers. The great ride of 1999 didn't last long though. In 2000, the fund failed to limit its sector allocation and went overboard on technology. The result: it lost a huge 40% during 2000, leaving it to languish at the bottom of the category.
Having realised that it goofed, the fund revisited disciplined investing in 2001. High technology stakes were pared down in favour of pharma and FMCG. Post-September 2001 attacks, with a high cash portfolio at its disposal the fund once again bought tech stocks. Today, the tech exposure is about 24% from its all-time low of 4% in September 2001. This time though large-caps like Satyam and NIIT have been replaced by second-rung offerings like Moser Baer, Infotech Enterprises and Mastek. Pharma still holds the top slot due to the fund manager's strong belief in the sector's potential. However, that's not true for the FMCG sector, which is grappling with stagnant sales. Incidentally, the fund has completely exited FMCG major Hindustan Lever, and brought down its exposure to the sector from a high 17% in October 2001 to 9% today. As for the another hot pick, PSUs, Birla Advantage has been extremely cautious in picking up a stake keeping in line with its investment philosophy.
Despite being fully invested now -- and with a vast sector exposure -- it is unlikely that Birla Advantage will clock fantastic returns as was the case in 2000. Nevertheless, it remains a solid long-term growth holding for the more aggressive types. Systematic investing in the fund should help turn disadvantages into an advantage. What say, investors!
This article was originally published on May 28, 2002.
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