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Birla Mid Cap

Fund Focus: Birla Mid Cap

Bullish on Services
Launched in October 2002, the fund started off with Rs 4.12 crore. In December 2003, the asset size touched Rs 281.44 crore from Rs 31.14 crore the previous month. By October 2004, it was down to Rs 93 crore. Currently, it handles Rs 159.41 crore.

In the two quarters this year, it underperformed the category average. However, in the quarter ended September, with the highest allocation to basic/engineering and services, it outdid the category average by 5.97 per cent.

The fund manager has been bullish on the service sector for quite a while, though technology has been on a gradual decline. Today, services and basic/engineering account for 25 per cent of the portfolio. Earlier, a single sector would account for that much. In February 2004, automobiles accounted for almost 25 per cent and in December 2002, technology accounted for 26.55 per cent.

Though it may take heavy sector bets, the fund is well diversified across 43 stocks. The fund is not an ardent follower of the 'buy-and-hold' strategy. Of the 165 stocks it has ever invested in, 75 have been in the portfolio for six months or less. With some stocks (Thermax, ABB, Andhra Bank, Asian Hotels, Blue Star), it followed a policy of profit-booking and entered the stocks again.

This has also, at times, led it to sell a stock too early and miss out on the huge upside after its exit. It bought Marico in November 2002 (when the stock was below Rs 100 on an adjusted basis) and exited by April 2005 at Rs 250. In the subsequent one year, the stock touched Rs 550. It re-entered the stock only in June 2006.

The key attribute which it can exploit to outpace its peers is its small size. It has the ability to make nimble moves among relatively less liquid mid-cap stocks.