Birla Sun Life Frontline Equity Fund

Here is another large cap fund to provide investors with safer investment avenue in the current volatile market. Birla Sun Life Frontline equity is an open-ended equity-diversified scheme, best suited for the conservative investors. The most imperative feature of the fund is that it has not only managed to outperform its category returns in the long run but also carries lower risk. This is quite evident from the beta (measure of risk/volatility of the fund as compared to its benchmark) of 0.87. The fund uses bottoms up approach for investment and the investment style is a mix of the growth and value.

The fund targets to keep the same sectoral weights within its equity portfolio as the benchmark index, BSE 200. However, the scheme has the flexibility of selecting stocks within a particular sector from a wider investment universe. This is the main reason behind the fund to outperform the benchmark returns since the time of its inception. Currently more than 80 per cent of the equity portfolio is invested in the large cap segment. The large cap focus helps the fund to reduce the volatility and provides stability to the returns. The fund proposes to have large cap bias with mid cap exposure to be maintained at 35 per cent in the future.

As per the funds fact sheet as on 31/7/2008, the fund is primarily invested in sectors like petroleum (10.84 per cent), telecom (9.17 per cent) and banks (8.81 per cent). The fund is positive on the telecom space on account of the growing trend in subscriber base and this sector is not likely to be affected by the overall slowdown due to the credit squeeze. But, the fund is still underweight in the other two sectors vis-à-vis its benchmark. However, this fund can't deviate too much from the benchmark sectoral allocation. Currently, the fund is bullish on sectors like FMCG, construction, power equipment, media and telecom and has reduced its exposure in sectors like commodities, auto and cement.

According to the fund manager Mahesh Patil, "The fund has focused on companies which are frontrunners in their businesses and are well managed. Also, the endeavour is to continuously look at valuations to spot the relatively underpriced stocks within the sector for relative outperformance." Mahesh Patil also manages other funds like Birla Sun Life Equity and Birla Sun Life Infrastructure Funds.

In the last three years, the fund has managed to give returns of 24.81 per cent and outperformed the category return that stood at 17.40 per cent. However, in the last one year, the fund has marginally managed to beat the category returns wherein the funds return stood at 1.09 per cent and category return that stood at minus 2.93 per cent. Thus, investors looking for safer investment avenue with long term investment horizon should invest in this fund with the systematic investment route.