Big picture maneuvering has helped Birla Advantage roll in cash, at least for a while. Long-term wealth creation potential -- which is the fund's philosophy -- explains why Infosys accounted for a 16.11% portfolio-exposure in September 1997. A stupendous return of 309% in 1999 puts that in perspective.
Just when it was basking in the glory of such glorious returns, the fund fell on its face in 2000, clocking a -45.82% return when tech stocks dropped like a rock. In February 2000, ICE stocks touched 76%, of which three stocks nearly accounted for half the corpus. But if its returns since launch were any indication, it would be foolhardy to write off this fund.
Today, looking at the fund closely one realises that it has made some strategic changes. It has realised holding on to a stock till kingdom come can be discomforting. For instance, Visualsoft Technologies. Fund manager Bharat Shah bought this stock way back in 1998 at a time when no one else was even aware of it. The fund lost heavily on Visualsoft's account. It finally sold its entire stake for pittance in October last year. Terrible considering the latter's scrip had at one point zoomed up to Rs 9,000, Shah instead of booking profits held on to the stock. Having paid through its nose, the fund now opts for profit booking often.
Owing to rapid deterioration in economic prospects, the fund reduced its tech exposure (54% in 2000) to a mere 4.71% in September 2001. So, the fund revisited disciplined investing in 2001, and it increased exposure to auto, energy and financial services sectors. Today though, healthcare is its no. 1 holding.
Ideally, the fund looks at companies that have long-term earning potential. But since it ignores the sector to which a company belongs, the fund can go overweight in a particular sector. With the 'impact of warnings and reduced growth scenario' being reflected in valuation, Birla Advantage has increased exposure to technology (20.30% now). Lately, the fund has exited tech majors like Satyam and Wipro and has picked up second-rung IT stocks like Moser Baer and Mastek. Correspondingly, the fund has pruned its stake in the FMCG sector pruned considerably. Incidentally, it has completely exited HLL.
Overall, Birla Advantage is a good fund for the braveheart.
This article was originally published on June 20, 2002.
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