Active management, right calls helping the fund stay ahead
The fund has been ranked in top 30 percentile (Crisil Mutual Fund Rank 1 or 2) since December 2009
 "Active management, right calls helping the fund stay ahead")
Launched in August 2002, Birla Sun Life Frontline Equity Fund is classified in the large-cap category of the CRISIL Mutual Fund Ranking. The fund has been ranked in the top 30 percentile (CRISIL Mutual Fund Rank 1 or 2) since December 2009, except for one quarter (December 2011). The fund has assets under management (AUM) of Rs 3,044 crore as of quarter ended March 2013 and is managed by Mahesh Patil, co-chief investment officer of Birla Sun Life Asset Management Company.
<B>Performance</B>
The fund has consistently outperformed its benchmark (S&P BSE 200) and category across various time frames. The fund posted annualised returns of 25 per cent over a 10-year period compared to 23 per cent and 21 per cent by the category and benchmark, respectively.
In the past three years, the fund has outperformed the benchmark 70 per cent of the times on a daily basis compared to 66 per cent by the category.
The fund has also outperformed its benchmark across market phases. During the bear phase of 2008, the fund outperformed its benchmark in eight out of 12 months. In calendar year 2011, when the benchmark fell 27 per cent, the fund outperformed its benchmark in 10 out of 12 months. In the bull phase of 2009 and 2012, the fund generated an alpha (excess return over benchmark) of three per cent and six per cent, respectively.
A lump-sum investment of Rs 10,000 in the fund at the time of its launch (August 2002) would have grown over nine times to Rs 96,000 as of April 18, 2013 (annualised returns of 23 per cent) vis-à-vis Rs 86,000 (annualised 21 per cent) in the peer group and Rs 65,000 (annualised 18 per cent) in the benchmark.
<B>Performance</B>
The fund has consistently outperformed its benchmark (S&P BSE 200) and category across various time frames. The fund posted annualised returns of 25 per cent over a 10-year period compared to 23 per cent and 21 per cent by the category and benchmark, respectively.
In the past three years, the fund has outperformed the benchmark 70 per cent of the times on a daily basis compared to 66 per cent by the category.
The fund has also outperformed its benchmark across market phases. During the bear phase of 2008, the fund outperformed its benchmark in eight out of 12 months. In calendar year 2011, when the benchmark fell 27 per cent, the fund outperformed its benchmark in 10 out of 12 months. In the bull phase of 2009 and 2012, the fund generated an alpha (excess return over benchmark) of three per cent and six per cent, respectively.
A lump-sum investment of Rs 10,000 in the fund at the time of its launch (August 2002) would have grown over nine times to Rs 96,000 as of April 18, 2013 (annualised returns of 23 per cent) vis-à-vis Rs 86,000 (annualised 21 per cent) in the peer group and Rs 65,000 (annualised 18 per cent) in the benchmark.
A monthly systematic investment plan (SIP) of Rs 1,000 for a period of 10 years would have grown to around Rs 3 lakh for a principal investment of Rs 1.2 lakh, delivering an annualised return of 17.4 per cent.
<B>Portfolio analysis</B>
Over the past three years, the fund manager has actively managed the portfolio in response to market volatility. During 2011, when the benchmark gave negative returns, the fund had lowered its average equity exposure to around 92 per cent with the lowest level of 90 per cent in November 2011. In the subsequent year, when the market started recovering, the average equity exposure was increased to 96 per cent (highest being 99 per cent in December 2012).
For the three years ended March 2013, the fund had the highest exposure to the banking sector of around 17 per cent followed by information technology (IT) with an average exposure of 10 per cent. These sectors have generated higher annualised returns of 6.3 per cent and 5.5 per cent, respectively, compared to the benchmark’s 1.2 per cent during the same period.
The fund is also well diversified and held an average of 62 stocks in its portfolio compared to the category’s 39 stocks during the three years ended March 2013.
<B>Portfolio analysis</B>
Over the past three years, the fund manager has actively managed the portfolio in response to market volatility. During 2011, when the benchmark gave negative returns, the fund had lowered its average equity exposure to around 92 per cent with the lowest level of 90 per cent in November 2011. In the subsequent year, when the market started recovering, the average equity exposure was increased to 96 per cent (highest being 99 per cent in December 2012).
For the three years ended March 2013, the fund had the highest exposure to the banking sector of around 17 per cent followed by information technology (IT) with an average exposure of 10 per cent. These sectors have generated higher annualised returns of 6.3 per cent and 5.5 per cent, respectively, compared to the benchmark’s 1.2 per cent during the same period.
The fund is also well diversified and held an average of 62 stocks in its portfolio compared to the category’s 39 stocks during the three years ended March 2013.
CRISIL Research