Fund Pick: Birla Sun Life Top 100 Fund

Standing out in the crowd

Launched in October 2005, Birla Sun Life Top 100 Fund is classified under the large-cap category of CRISIL Mutual Fund Ranking. It features in the top 30 percentile (CRISIL Fund Rank 1 or 2) over the past twelve consecutive quarters as of September 2016. The fund’s quarterly average assets under management (AUM) was Rs 2,336 crore as of September 2016. It is managed by Mahesh Patil, who is also the Co-CIO of the fund house.

The fund aims to provide capital appreciation over medium-to-long term, by investing predominantly in a diversified portfolio of equity and equity-related securities of top 100 companies, by market capitalisation.

Consistent outperformance

Birla Sun Life Top 100 Fund has consistently outpaced the category (funds ranked under the large-cap category in September 2016 CRISIL Mutual Fund Ranking) and the benchmark (Nifty 50) by significant margin across timeframes. It posted a trailing five-year annualised return of 17.38 per cent, outperforming the category's 13.98 per cent and the benchmark's 10.59 per cent. 

The fund managed returns of 0.73 per cent during the European crisis (January 2011 to June 2013), in contrast to negative returns posted by the category and benchmark. Its performance after the European crisis was commendable. The fund delivered 42.03 per cent per annum, compared with the category's 36.39 per cent and the benchmark's 28.66 per cent. The current Chinese slowdown (March 2015 to December 2016) is also accompanied by an encouraging return of 20.38 per cent, better than the category's 17.87 per cent and the benchmark's 15.00 per cent.

An investment of Rs 1,000 in the fund on October 24, 2005 (inception of the fund) would have more than quadrupled to Rs 4,357 on December 26, 2016, implying an annualised return of 14.72 per cent, again beating both the benchmark (Rs 3,302; 11.28 per cent) and the category (Rs 3,805; 12.69 per cent).

On a similar note, Rs 1,000 invested per month in the fund since inception via a systematic investment plan (SIP), totalling Rs 1.35 lakh, would have grown to Rs 2.82 lakh by December 26, 2016, implying a 12.50 per cent annualised return; for the benchmark, they would have been Rs 2.12 lakh and a 7.80 per cent annualised return.

Portfolio analysis

The fund's portfolio is well-diversified at the stock level, with an average holding of 68 stocks spread across 24 sectors over the past three years. The top 10 stocks formed 38.73 per cent of the fund's portfolio as of November 2016. 

Over the past three years ended November 2016, the top five sectors on an average constituted 56.46 per cent of the portfolio, implying higher sectoral concentration. Over this period, banks on average had the highest exposure of 22.06 per cent, followed by software (11.69 per cent), pharmaceuticals (7.85 per cent), automobiles (6.68 per cent) and finance (6.41 per cent).

The fund has consistently held 25 stocks for the past three years, from its investment universe of 130 stocks. The top stocks among those consistently held include HDFC Bank (5.83 per cent), ICICI Bank (4.17 per cent), Infosys (3.98 per cent), Reliance Industries (3.33 per cent) and Larsen & Toubro (3.09 per cent).