Birla Advantage aims at long-term capital growth mainly through investment in equities. Normally, at least 70 per cent of the fund is to be invested in equities. The fund aims to achieve its objective by picking "strong growth stocks at attractive values". Stated stock selection criteria include outstanding growth prospects, underlying fundamental values and strong management.Birla Capital International asset management company, a joint venture between Birla Group (60 per cent) and Capital Group Companies Inc (40 per cent) manages Birla Advantage fund. Capital Group is one of the largest FII in the country. Besides Birla Advantage, Birla Capital International AMC manages two domestic funds, the Rs 600 crore Birla Income Plus (an income fund) and Rs 50-crore plus Birla Cash Plus (a quasi money market fund). The AMC is also a sub-fund manager for the offshore fund, India Advantage Fund. Birla Mutual fund also has also recently launched its maiden domestic tax planning scheme. Bharat Shah is the chiefinvestment officer of the AMC.
Birla Advantage was launched in February, 1995. Helped by the group brand name and a concerted marketing effort, the fund mobilised Rs 162.24 crore during its initial public offering from around 90,000 investors. On the other hand, the collection of open-end growth funds launched in early 1995 was not as impressive. Although the fund has witnessed redemption pressures during the two year bear phase, the net out flow in the fund has not been as dramatic as other open-end equity funds. Since December, 1996, the fund has more or less been able to guard its net asset value and unit capital. Today, Advantage is one of the few open-end equity funds with a corpus of over Rs 100 crore. As on December 31, 1997, the corpus of the fund was around Rs 107 crore. Although Advantage has seldom been the top performer, it has consistently been among the top five performers during its tenure. The fund has outperformed the major broad-based market averages over most time periods.
Compared toits stated investment strategies of a mix of growth-value investing strategies, the fund has consistently followed a growth oriented strategy. The emphasis has been more on companies with a "visible" earning potential. The fund follows a "bottoms up approach" while selecting stocks.
Except during the initial phase, the fund has almost always maintained an above 85 per cent exposure in equities. It is only in the quarter ending December 31, 1997 that there was a more than 11-fold increase in the debt exposure from Rs 1.62 crore to Rs 13.26 crore. The fund is mainly invested in mid-cap liquid stocks though it has a significant large cap exposure. The Rs 91 crore equity portfolio has exposure in around 65 stocks at an average concentration level of around Rs 1.4 crore. The top five holdings account for around 33 per cent of the equity exposure and the top ten holdings account around 48 per cent. Birla Advantage does not carry any load on investments over two years. A 2 per cent exit load is charged onredemption in less than two years. The minimum investment is Rs 1000 and in multiples of Rs 500. The fund has been as volatile as the market during the past year, touching a low of Rs 9.52 and a high of Rs 13.28. An ideal way to enter the fund could be a systematic investment plan and averaging out the gyrations.
-- Value Research
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
