Mutual Funds-Good Picks

Geojit Research Desk
 

Sundaram BNP Paribas Select Focus
The scheme aims to generate capital appreciation / income through investment in a very few select stocks. According to the stated strategy, it will hold a minimum of 10 stocks and not more than 20 at any point of time. Performance of the fund till date shows that this focused strategy has been successful and it is a good pick for any class of investors.
The fund was launched in July 2002 and the annualised return since launch is 44% at the current valuation. The fund has yielded at an annualised average rate of 50% for the last five years and at 48% for the last three years.
Assets under management is Rs.700 crore and the fund is managed by Ms. Srividya Rajesh.

Though the fund follows an aggressive investment strategy, the risks are partly mitigated by a strong bias towards good quality large cap stocks. Over 85% of its latest portfolio is constituted by large cap stocks. By picking the right stocks from the potential sectors, the fund has been providing consistent returns over time.

The scheme is now overweight on energy with 26% of its investment in stocks under this category. Financial services, technology, metals, diversified, consumer non – durable and healthcare are the other preferred investments of the scheme.
 

DSPML Equity
The scheme seeks to generate long-term capital appreciation, from a portfolio, which is substantially constituted of equity and equity related securities and may also invest a certain portion of its corpus in debt and money market securities in order to meet liquidity requirements. Up to 90% of assets may be parked in equity and related instruments while a maximum of 10% may find a place in debt or liquid instruments, according to the stated investment strategy.
Currently, the fund manages assets worth Rs.1100 crore in a well diversified portfolio of large, mid cap and small cap stocks. Besides, it has some exposure in the derivative segment.
DSPML Equity fund was started in 1997 and it has provided an average annual return of 28% till this date since launch. Performance records for other long periods are also looking attractive with 56% return for the last five years and 45% for the trailing three year period on an annualised basis.

The fund has given higher weight to the energy sector by investing nearly 16% of its assets. Technology, financial services and services are the other favored sectors.

Magnum Balanced
The fund ranks at the top with an average annual return of 43.27% for the last five - year term and the fourth rank for the last three - year period with a return of 32.33%. It has an excellent track record over the long term, beating the category indices with a wide margin.

The fund has been providing attractive returns by maintaining a balanced portfolio of equities and debt. The fund manages assets worth Rs.371 crore of which nearly 66% is in equities while the balance is parked in debt and liquid instruments. The equity portfolio has been well diversified in to large, mid cap and small cap stocks and higher weight has been given to giant and large cap stocks. Construction, energy, technology, basic engineering and diversified company stocks are favored in the equity portfolio.

Balanced funds are a better alternative when the equity market is volatile as the debt component of the portfolio may act as a cushion against any melt down in the equity assets. Magnum Balanced is one of the best options in this category.
 

Sundaram BNP Paribas Tax Saver
• The fund has been doing consistently well, beating the category average returns and the major indices at times.
• The fund rewarded nearly 53% annually for the last five years while the category average and the Sensex yielded 47% and 43% respectively.
• An out performer for any other periods such as last three years, two years, one-year etc while the category average returns are concerned.

• The fund was launched as a tax-planning scheme in November 1999 and the average annualised returns since launch is over 26% at the current valuation.
• The portfolio is well diversified in to different segments while the exposure in to any single stock is limited below 4% of total net assets. Highest exposure in financial services and energy segments with a total exposure of 30% of Rs.447 crore net assets.
• More exposure into large caps (60%) but mid caps and small caps are not avoided.

• The scheme is eligible for tax exemption under Section 80 C of the IT Act. Good for attractive returns and tax planning.
 

Birla Sunlife Equity
The fund seeks long-term growth of capital and regular income through 90% investment in equities and 10% in debt and money market portfolio.
The scheme was launched in 1998 and its long term track record is attractive with 38% annualised return since inception and 56% annual growth during the last five years.

The fund is basically large cap oriented but a little overweight in mid cap and small cap stocks recently. Nearly 54% of investments are in mid cap and small cap category and this seemed to have affected its performance recently. Over all structure of the portfolio is reasonable and rewarding in the long term view.