BSL Advantage Fund - portfolio of High Conviction ideas that is geared to benefit from changing Business Cycle

Every sector, stock or style of investing has its high point as well low point, thus identifying market trends and allocating rotating money across sector, stocks and market caps/ style can be hugely rewarding. Birla Sun Life Advantage fund has been doing this job  very competently for more than 2 decades now. The fund builds a portfolio of high conviction ideas that are geared to benefit from changing business cycles.  

BSL Advantage Fund is our multi cap offering focusing on select businesses. It is our first launched fund with a track record of more than 21 years. Since its inception, the fund has delivered returns of 18.32% CAGR, outperforming its benchmark S&P BSE 200 by a huge margin of 7.6% p.a..  (as on 30^th April 2016)

A fund that seeks to take Advantage of every opportunity: Sector Bets, Company Bets, Market cap Bets and taking bet on any other macro/micro factor that would have material impact on stock markets.

Some of the key highlights of this fund are as follow:

v We call this our Business cycle fund. It takes advantage of different business cycles by flexibly moving money across different sectors, market caps & stocks.

v Fund is Benchmark agnostic. One of the key reasons for success of BSL Advantage Fund has been its ability to allocate / rotate money across sectors (timely higher exposure to outperforming sectors and timely lowering exposure to underperforming sectors).

v Currently the fund is focussing on sectors like Consumer durables, Cement,  Pharma, Auto & Auto Ancillary & Financials. Majorly Consumption & Structural Reforms oriented themes.

v Fund has a slightly aggressive stance compared to peers (Multi-cap funds in its category). It is different in following ways:

o Demonstrated more flexibility to move across market caps

o Relatively higher allocation to midcaps

o Concentrated strategy – lesser number of stocks (larger exposure in high conviction ideas). Average Exposure to top 10 stocks normally between 40% - 45% and average exposure to top 4 sectors 65% to 70%.

v Research driven fund – more focus on picking stocks basis research than focussing on allocation to sectors. Strategy is to pick stocks which have a

o Secular growth (earnings) visibility normally higher than the industry and are available at reasonable valuations.

o Companies with strong fundamentals and cash flows.

o Companies with strong promoters

v Some of our successful picks applying the above strategy have been likes of:

o Eicher Motors: Bike lovers' first choice is Royal Enfield. It is a well known brand. They also have commercial vehicles that they sell. Order book of this company is always full. The volumes and earnings of the company have been growing at more than 35% for the last three years.

o Natco Pharma: Niche player in pharma sector. Company majorly caters to US markets. Domestically also revenues have tripled over last 8 years. Company invests a lot in Research and Development. Specialist in Oncology treatment (Treating cancers and tumors by making Complex medicines).

o Repco home finance: Repco will be the biggest beneficiary of 'Housing for all by 2022' theme from Government. They are specialised player in small ticket (affordable housing) and self-employed borrowers segment.

v Since inception the fund has delivered returns of CAGR 18.32%, implying that an investment doubles every 4 years. (as on April 2016)

v A perfect SIP offering, investment through SIP in the fund would be a "Crorepati" proposition. An investment of Rs.10,000 per month in the fund since inception would've grown to Rs.2.46 Crores. (as on April 2016)

v The fund is a Top Quartile Fund in the diversified equity category on a 2 and 3 year basis (ranked amongst top 5 funds in the multicap category).

v The fund has declared 17 dividends in 20 years. The fund has been consistent in paying dividends and has not missed a single dividend since the year 2008.