The aggressive fund has matured in terms of performance over a period of time. It has shown ability to take timely sector calls that have proved rewarding
01-May-2007 •Research Desk
The fund was bought over by Birla Sun life in September 2005 from Alliance Mutual Fund. At the time of the new fund offer, the scheme aimed to target the same sectoral weights as BSE 200, subject to flexibility of selecting stocks within a particular sector.
Of late, barring the allocations to technology and financial services, there is little in common with the BSE 200 sector allocations. The fund also displays a tendency to move between sectors rather abruptly. It increased its allocation to the energy sector from 5.31 per cent in January 2007 to 10.28 per cent in February 2007 only to be dropped to 7.11 per cent in March 2007. Financial services and consumer non-durables are other sectors where the fund manager moves quite aggressively. Over time the fund has reduced the level of concentration in the portfolio. The portfolio maintains 30 to 41 odd stocks in the large cap category.
In terms of performance the fund has matured over time, moving to a 4-star status and sustaining this performance for the past nine months now. The year 2006 saw the fund ranked at 27 among the 145 diversified equity funds.
The fund managed to contain losses to 7.25 per cent during the quarter ending June 2006 while the category as a whole lost a whopping 13.6 per cent. To some extent this achievement can be attributed to the large inflows received in May 2006, because of which the fund held 22 per cent of its assets in cash (as of 31 May 2006) at a time when the markets turned bearish between May 11 and June 15, 2006.
The fund further followed this up with a good September 2006 quarter; timely sector calls seem to have done the trick here, with an increase in exposure to financial services, construction and automobile sectors.
The fund is aggressive in the manner in which it moves between sectors and so far these moves seem to have paid off. It is not too adventurous in picking stocks.