A Fund For All Seasons - Birla Sun Life Dividend Yield Plus

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Most of us consider only the expected rate of return while investing, with an aim to chase purely returns. However, the smartest way of investing is to view the expected rate of return in the light of each unit of risk taken to earn the returns which are in excess of the risk-free rate of return (i.e. try to earn maximum returns with minimum possible risk). For this, use Sharpe and Treynor ratios which indicate the risk adjusted returns and consistency and count for the volatility of the portfolio. As mentioned in the last report, dividend yield theme funds are on the top in terms of the Sharpe ratio, as three of the top five funds in diversified funds category are following this theme. And this fund is the best among its category, beating the category by over 1088 basis points on YTD basis. It has also shown consistency over the longer time frame, beating the category return by 1775 and 1286 basis points in one and three-year period respectively.

The fund till 2007 was a middle-of-the-road performer, though it has made a complete turnaround after Ankit Sancheti took over the fund management. After that the fund has done well in all phases of the market. At Birla Sun Life AMC, Ankit also manages other four equity funds that have outperformed their categories over longer period.Geared by the flexi-cap approach, the fund’s performance in bullish phase is driven by the small and mid-cap allocation.

Its bias for the value style of investing brings in stability and resilience in the bad times. It did well to contain losses in CY08, outperformed in CY09 and remained ahead of its peers in CY10. In June 2010, it continued to have higher allocation towards the small and mid-cap segment, with about 80 per cent of equity portfolio invested in such stocks. The 57-stock equity portfolio seems quite diversified wherein the top ten holdings contributed 32 per cent of the assets, while about 20 per cent of the equities were invested in defensive sectors like FMCG and healthcare which along with diversified portfolio lowers the fund’s risk. Thus even low-risk investors can take exposure to this fund through SIP.