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Birla Advantage Fund

Dhirendra Kumar

Birla Advantage, an aggressive equity fund, was launched in 1995. The fund has paid two dividends to date - the most recent was 80 per cent in March 2000. Entry into the fund is at a load of 2 per cent while exit is at net asset value. At a paled down annualised return of 18.75 per cent, Birla Advantage well bears the scars of market volatility in 2000.

FUND BASICS   Objective    Size (Cr)    NAV: 16/05/2001    Exit Price    Entry Price    Total Return   Growth   361.27   24.05   24.05   24.53   18.75%

Launched at a time when the cyclical rally in 1995 had fizzled out, the fund went through a prolonged spell of inertia, just managing to guard its assets. Pursuing a bottom up approach, the fund invested in the golden triangle of Information Technology, Pharma and FMCG sectors since 1998.

With the fund manager's knack for picking up potentially strong performers, coupled with the market recovery in late 1998, the fund gained momentum. With big bets on technology stocks, built ahead of the technology boom, the fund gained a whopping 308 per cent in calendar 1999 against a 64 per cent return by Sensex.

The past year has shown that Birla Advantage's aggressive strategy, despite the fund's nod to diversification, can occasionally run aground. The fund has shed nearly half of its value over the past year, dragged down by a huge technology position coming into 2000. Its position in the volatile ICE stocks peaked at 76 per cent in February 2000 with just three stocks accounting for nearly half of the portfolio. The continued concentration in the high-priced technology stocks (average 65 per cent) saw the fund succumb to the tech carnage. With its strategy toppled, the fund lost a whopping 46 per cent in calendar 2000 and made it to the bottom quartile.

BENCHMARK COMPARISONS (%) (11/05/2001)      1M    3M    6M    1Yr    3Yr   Fund   4.89   -25.30   -32.84   -44.79   26.71   Nifty Tot. Ret.   6.97   -18.71   -7.80   -12.14   0.66   Sensex   7.05   -19.05   -9.68   -16.27   -3.99   Obj. Avg.   7.90   -22.99   -16.77   -22.98   3.97

While the fund has scaled down its technology exposure in the current calendar, it has now diversified to pitch in favour of pharma, FMCG and economy stocks. "The emphasis on diversification has increased now but the change in outlook for technology is not permanent," says Jeremy Beswick, CEO and President, Birla Sunlife AMC.

The fund continues to tread ahead with trend spotting with its current focus on select pharma stocks. This strategy has been disappointing in the last year but the fund's long-term return is still impressive -- 20.21 per cent for the five years ending April 30, 2000. Given its past track record and stance on technology, the fund is likely to pursue an aggressive investment strategy, which calls for a long-term commitment.

Top Holdings (30/04/2001)      Value (Cr)    % of Assets   Cipla   36.98   10.24   Pfizer   19.73   5.46   Hindalco Ind.   14.98   4.15   S S I   14.41   3.99   Sun Pharmaceuticals   12.66   3.50   Reliance Industries   11.19   3.10   Britannia Industries   10.52   2.91   I T C   10.32   2.86   Gujarat Gas Co.   10.28   2.85   Punjab Tractors   9.94   2.75   Hero Honda Motors   9.40   2.60   H C L Technologies   9.39   2.60   Moser Baer   9.39   2.60   Asian Paints   9.00   2.49   HPCL   8.29   2.29

Source: Value Research

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