Aditya Birla Sun Life Medium Term Plan sees growth from aggressive strategy

Launched in March 2009, the Aditya Birla Sun Life Medium Term Plan has consistently ranked in the top 30 percentile of the medium-duration category in the CRISIL Mutual Fund Ranking (CMFR) for three consecutive quarters up to June 2024. As of June 2024, the fund’s assets under management stood at Rs 1,861 crore, an increase from Rs 1,416 crore in June 2022.

The fund has three managers: Sunaina da Cunha, who has managed the fund since April 2017; Mohit Sharma, since August 2020; and Dhaval Joshi, since November 2022.

The fund’s investment objective is to provide investors with the opportunity to generate regular income and capital appreciation through investments in debt instruments with medium-term maturity.

Consistent performance

The fund outperformed its benchmark over the past six months and in the one-, two-, three-, five-, seven-, and 10-year trailing periods. It also fared better than its peers ranked in the medium-duration funds category in the June 2024 CMFR over the same periods.

To put this in perspective, an investment of Rs 10,000 in the fund on March 25, 2009 (the fund’s inception date) would have grown to Rs 36,070 by September 26, 2024, at an annualised rate of 8.62 per cent. In comparison, the same investment in the category and benchmark would have increased to Rs 29,427 (7.2 per cent annualised rate) and Rs 33,415 (8.08 per cent), respectively.

Duration management

The fund maintained a modified duration ranging from 2.04 years to 3.82 years over the past three years, averaging 3.06 years. In August 2024, its modified duration stood at 3.82 years, compared to 3.47 years in August 2023, allowing it to lock in the prevailing higher yields.

Portfolio analysis

Over the past three years, the allocation was predominantly to non-convertible debentures and bonds, averaging 59.72 per cent, followed by sovereign securities at an average of 30.01 per cent. Exposure to money market securities (certificates of deposit and commercial papers) averaged 2.24 per cent during this period.

In the past three years, investments in AA-rated and below securities were relatively higher, indicating an aggressive approach to its credit profile, with an average exposure of 43.17 per cent, compared to 33.12 per cent among its peers. The allocation to the highest-rated securities (AAA/A1+) averaged 18.78 per cent, compared to its peers’ 30.5 per cent. Additionally, the fund maintained a lower allocation to government securities, averaging 30.01 per cent, compared to its peers’ 39.44 per cent.