Low risk, high consistency in returns and a defensive strategy are facets which make Birla Sun Life Top 100 (BSL Top 100) a suitable bet for conservative investors. Benchmarked to the Nifty 50, the fund maintains a large-cap focus in all market conditions. It takes cash and debt calls as well as finds refuge in sectors, such as pharma and consumer non-durables, to cut losses in tough times.

Performance

BSL Top 100 beats its benchmark over one-, three- and five-year periods as well as in rising and falling markets. The fund comes out as a superior option to peers such as DSPBR Top 100, ICICI Pru Top 100, and UTI Top 100 on two counts. One, over the same one-, three- and five-year periods, BSL Top 100’s returns have been higher that those of these funds. It also sports the highest Sharpe ratio of 0.74 among the peer group, indicating the best risk adjusted performance. Secondly, the fund also scores on consistency. On a one-year rolling return basis, BSL Top 100 beats the benchmark 95 per cent of the time in the last five years.

For the same period, others are a far cry at 79 per cent (ICICI Pru Top 100), 68 per cent (UTI Top 100) and 58 per cent (DSPBR Top 100).

Playing safe

The fund has been able to emerge on top despite being conservative. Be it bull runs or bear phases, exposure to mid- and small-cap stocks (those with market capitalisation of ₹7,500 crore or less) remain at a maximum of 10 per cent of the fund’s equity holdings. During falling and volatile market conditions, such as the one we have been witnessing in the last one year, its equity exposures come down to 90-95 per cent.

But its ability to sense the tide turning and redeploy funds is what has kept it on top. It did so, for instance, in 2012 where from an 88 per cent allocation in January, equity holdings zoomed to 96 per cent in the next month and stayed predominantly over 95 per cent during the rally that year. Ditto, with the rally that began in September 2013. BSL Top 100 also rides on the right sectors to give a leg-up to returns. It latched on to cyclicals in 2014 and is back to raising stakes in defensives such as pharma now.

Banks and software have always been preferred sectors. Bank holdings have reduced in the last one year though and the fund has leaned towards private banks. It is also betting on reforms in the oil and gas and power sectors by pushing up stakes in these spaces.

Some of the midcaps in the latest portfolio include Gujarat State Petronet, IDFC and PTC. NTPC, Sun TV and Hero MotoCorp are recent additions.

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