A glorious decade
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The year 2005 is a landmark in the history of Birla Mutual Fund. On 24 February 2005 its flagship fund, Birla Advantage Fund (BAF), completes 10 years of existence.
Birla Advantage Fund (BAF)
Launched in the year 1995, BAF started with an initial corpus of Rs.156 crore spread across 92,000 investors.
An open-ended diversified equity fund, BAF is among the few funds to have such a long track record. Judiciously combining the investment themes of value and growth, the fund has over the years attempted to identify a large number of good investment ideas that have provided superior returns.
With intensive and diligent in-house research, the fund has in the past also tried to identify and pick up a number of multi-baggers in the portfolio at the initial stage of their growth. Some of the success stories of BAF have been: Infosys, Bharti Televentures, Thermax, Bharat Forge, United Phosphorous, Hero Honda, State Bank of India, Bharat Electronics and LIC Housing Finance, to name a few.
Performance and returns
BAF has been able to outperform the benchmark BSE Sensex since inception. Here is a snapshot of its performance over time:
| Returns | 1 year | 3 year | 5 year | Since Inception |
| BAF growth | 26.85 | 40.21 | 2.5 | 23.15 |
| S&;F Nifty | 10.65 | 25.22 | 7.03 | 7.48 |
| BSE sensex | 13.04 | 26.47 | 5.68 | 6.79 |
Inception: 24 February 1995. Returns are CAGR. Past performance may or may not be sustained in the future. Returns are calculated based on the NAV of Rs.64.56 of the Growth Plan.
Systematic Investment Plan (SIP) in BAF
A Systematic Investment Plan (SIP) is a powerful tool that can help investors c;reate wealth over time overriding market volatility and sentiments. If an investor had invested Rs.1,000 in BAF every month since inception (24 February 1995), the value of his invested amount i.e. Rs.1,17,000 would as on 31 December 2004 be Rs.4,77,381. The investor would have got a CAGR of 27.25 per cent.
In the same period, an SIP in the BSE Sensex would have given a return of 11.35 per cent. (Load has not been taken into consideration. For the purpose of analysis Dividend Reinvestment NAV has been considered. Past performance may or may not be sustained in future.)
Corpus
As on 31 December 2004, BAF had a corpus of Rs.507.28 crore.
Dividends declared
| Declared on date | Dividend (%) | Dividend* (in Rs. per unit) | Face Value (in Rs.) | Cum dividend NAV (Rs. per unit) |
| 27-Aug-99 | 20 | 2.00 | 10.00 | 33.81 |
| 22-Mar-00 | 80 | 8.0 | 10.00 | 70.37 |
| 28-Nov-03 | 30 | 3.00 | 10.00 | 44.88 |
| 23-Jan-04 | 20 | 2.00 | 10.00 | 47.33 |
| 12-Mar-04 | 25 | 2.50 | 10.00 | 46.1 |
Past performance may or may not be sustained in future.* Dividend distribution is not assured and is subject to availability of distributable surplus. After payment of dividend, the NAV will fall to the extent of payout.
Portfolio allocation
The portfolio remains well positioned across various sectors. The sectoral allocation as on 31 December 2004 is given alongside.
Fund manager
The fund is managed by Nishid Shah, CIO-Equities, Birla Sun Life AMC Ltd., who has more than 19 years of experience and has been with the company for the past four years.
According to the fund manager:
- Retail credit growth pick-up in India is an opportunity for banking sector and keeping attractive valuations in view weightage in banks has been increased.
- Keeping the product patent regime in view and strong fundamentals of MNC pharma companies, the fund has increased exposure to the pharma sector.
- The fund has 9 per cent exposure to the telecom sector as the telecom market is largely under-penetrated and has tremendous growth potential.
- Portfolio valuations remain attractive in comparison to the indices in terms of P/E, earnings growth and ROI/ROE
Market outlook
India is amongst the fastest growing economies in the world and on both macro and micro economic parameters, the economy has seldom been on such a strong footing. We are in a new era wherein the GDP growth is likely to sustain at reasonably high levels for a decade or more and corporate India is all set to reap the benefits of this resurgent economy.
The strong commodity prices, prospects of robust demand and benign interest rates have led to a revival of the capex cycle in the economy. In the last 15 years, returns from Indian markets have been around 15 per cent CAGR. With expectations of a steady GDP growth coupled with global competitiveness of domestic players, corporate earnings are expected to grow at 16-18 per cent for the next couple of years. This strong corporate earnings growth could result in superior returns for the equity investors.
The emerging outsourcing opportunity across sectors like IT, pharmaceuticals, capital goods, engineering and textiles has added a long-term sustainability and growth of corporate earnings. As we move into 2005, the removal of textile quota and introduction of product patents in pharma will result in further alignment of the Indian economy with global economies.
The portfolio of BAF with an optimum mix of large and midcap stocks is well positioned to take advantages of these dynamic changes in the Indian economy. The Fund''s philosophy of buying outstanding businesses at reasonable prices should result in superior returns for investors.
Constitution: Birla Mutual Fund (BMF) has been set up as a trust under the Indian Trust Act, 1882.
Sponsors: Sun Life (India) AMC Investments Inc. and Birla Global Finance Ltd. (liability restricted to seed corpus of Rs.1 lakh)
Trustee: Birla Sun Life Trustee Co. Pvt. Ltd.
Investment manager: Birla Sun Life Asset Management Company Ltd.
Risk factors: Mutual funds and securities investments are subject to usual risks associated with capital and money market instruments. There can be no assurance that the fund''s objectives will be achieved. As with any investment in securities, the NAV of the units issued under the schemes can go up or down depending on the factors and forces affecting the securities markets. Past performance of BMF does not guarantee the future performance of the schemes of BMF and does not form a basis of comparison with other investments. The name of the scheme does not in any manner indicate either the quality of the scheme, its future prospects or returns.
Scheme objective: An open-ended growth scheme to achieve long-term growth of capital at relatively moderate levels of risk through a diversified research based investment approach.
Load structure:
Entry load: In respect of each purchase / lateral shift in / of units, less than Rs.2 crore in value, an entry load of 2.25 per cent is applicable. In respect of each purchase / lateral shift in / of units, equal to or greater than Rs.2 crore and less than Rs.5 crore in value an entry load of 0.50 per cent is applicable. In respect of each purchase / lateral shift in / of units, equal to or greater than Rs.5 crore in value no entry load is applicable. Exit load: Nil.
Liquidity: The fund offers NAVs, subscription and redemptions on all business days. Please check applicable load structure before investing. For details and scheme-specific risk factors read offer documents and refer to your financial advisor before investing.
Contact
Email: connect@birlasunlife.com
website: www.birlasunlife.com
Mr. Sandeep Gurumurthi
Group Head, Communication & Brand
Aditya Birla Management Corporation Pvt. Ltd.
Call: +91-22-6652-5000 / 2499-5000
Fax: +91-22-6652-5741 / 42