Over the past year, the AUM has increased by 28% compared to almost 5% for the category as on September 2012
Launched in December 1999, Birla Sun Life MNC Fund has maintained its Fund Rank 1 position under Small & Midcap Equity category of CRISIL Mutual Fund Ranking for the past six quarters. The fund’s average assets under management (AUM) stood at Rs 319 crore for the quarter ended September 2012. Over the past year, the AUM has increased by 28% compared to almost 5% for the category as on September 2012. Since June 2009, the fund has been managed by Ajay Garg, Senior Fund Manager at Birla Sun Life Mutual Fund.
The objective of the fund is to generate long-term capital appreciation by investing in multi-national companies (MNCs). The fund intends to identify such companies with long-term growth prospects through a research-based approach. Over 70% (average) of the fund’s portfolio was held in small and midcap companies over the past three years. The rest is in large cap stocks.
The fund has outperformed its benchmark (CNX MNC Index) and its category across various time frames (1, 2, 3, 5 and 7 years). In the three year time frame, it has delivered annualised returns of 16.6% compared to 7.6% of the benchmark and 9.4% of the category (see Chart). Rs 10,000 invested in the fund since inception would have grown to around Rs 70,000 (annualised return of 16.3%) as on November 19, 2012. A similar investment in the benchmark would have approximately grown to around Rs 32,000 (annualised return of 9.5%).
A monthly systematic investment plan (SIP) of Rs 1,000 for a period of five years would grow to around Rs 1 lakh delivering an annualised return of 20.8%. A similar investment in the benchmark would have grown to around Rs 84,000 (annualised return of 13.6%).
The fund’s performance in terms of risk-adjusted return relative to its category is one of the key factors propelling its performance to CRISIL Fund Rank 1. The fund’s Sharpe ratio (which measures the excess returns over the risk free rate per unit of risk) is at 1.18, which is considerably higher than that of its category average of 0.42.
The fund is holding a relatively concentrated portfolio compared to the category both at the sector and the stock level mainly because of the MNC theme that the fund follows. Over the past three years, top five sectors constituted 63%, of the portfolio while the category had 34% exposure to these sectors. In addition, the fund’s top 10 stocks constituted 49% of the portfolio vis-à-vis 40% for the category.
The fund has a higher exposure of about 33.4% to defensive sectors like consumer non-durables and pharmaceuticals compared to the category average of 19% over this period. The representative indices for these sectors - CNX FMCG and CNX Pharma - gave a superior annualised return of 26.2% and 17.5% respectively against 3.7% annualised return by S&P CNX Nifty till November 19, 2012.
At the stock level, the fund held 33 companies in its portfolio (average) over a three year period compared to 48 for the category. 25 out of 33 stocks have been consistently present in the portfolio during this period.
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