Birla Advantage seeks long term capital appreciation primarily through investments in equities. Normally about 70 per cent of the funds are to be invested in equities and balance in debt and money market. The fund aims to achieve its objective by picking "strong growth stock at attractive valuations". Stated stock selection criteria include outstanding growth prospects, underlying fundamental values and strong management.

The fund has followed a growth oriented strategy. The emphasis has been more on companies with visible earning growth. Twenty two companies out of forty seven in the funds portfolio have shown a three-year earnings growth of over 80 per cent. Most of the stocks have a significant market fancy with twenty four stockshaving a price earning ratio of over 20. The fund clearly follows a bottom-up approach in selecting stocks. Despite the fund having a substantial exposure in certain sectors, the exposure is spread over limited stocks. For example, the 13 per cent exposure to infotech is spread over 3 stocks. Twenty eight stocks in the portfolio have a price-book value ratio of over 4. Thirty eight stocks have a book value of over Rs 50.

The fund is predominantly invested in mid-cap liquid stocks, though it has a significant large cap exposure. Forty five per cent of the net assets are invested in stocks with a market capitalisation of less than Rs 1000 crore while 36.21 per cent is invested in stocks with market capitalisation of over Rs 1000 crore.

Although Birla advantage has seldom been the top performer, it has consistently been among the top five performing equity funds during its tenure. In 1997-98 the fund has appreciated by 22.23 per cent compared to the 15.82 per cent growth in market as represented by the BSESensex. During 1996-97, the fund had depreciated by 7.40 per cent compared to the 0.17 per cent fall in the Sensex. In 1995-96 the fund appreciated by 12.13 per cent compared to the 3.24 per cent growth in the Sensex. Over the past three years it has been the top performing growth fund. Birla Advantage has appreciated by an annual rate of 14.57 per cent since its launch in February 1995 compared to 8.7 per cent growth in Sensex.

Birla Advantage is among the seven open end equity funds to out perform the market in 1997-98. It is the only fund with a corpus of over Rs 100 crore to do so. Four of the five funds which out performed it, Bluechip, Apple Platinum, Centurion Open end fund and Prima Plus have been restructured in 1997. Despite being launched around the same time as theses funds, Birla Advantage has not resorted to large scale restructuring. The ITC Top 200, the other fund which managed to out perform the fund, is a relatively new fund and by definition invests only in large cap stocks.

Moreoverwhile other growth funds have resorted to an increased money market and debt exposure to guard their value in the bear phase, Birla Advantage except for the initial six month has maintained an over 85 percent equity exposure. This ensured that the fund was there when the market bounced back.

It could out perform Reliance Vision last year's top performing fund in 1997-98.

Birla Advantage scores over other funds due to its consistency. The fund has been diligent with its investment strategy than most of its peers. Birla Advantage also has one of the more attractive load structure. Investments over two years carry no load. For investments of less than two years the fund charges a 2 per cent exit load. This prevents short term investment in the fund. While funds like Alliance '95 based on their performance can justify the entry load they charge, it has to be remembered that load is not a premium paid for better investment performance. It is the premium paid for better investor service.

With NAV at historichigh it may not be prudent to commit heavily in Birla Advantage at one go. The best way to invest in an equity fund is a gradual entry through the systematic investment plan. A systematic investment plan of Rs 1000 each month in Birla Advantage, thirty nine months from launch would be worth Rs 51,331 today.