Long term wealth creatorIn its 21st year of operation, the Aditya Birla Sun Life Equity Fund is one of the biggest multi cap equity funds in India. Managed by Anil Shah for nearly six and a half years, this scheme stands out among dozens of peers whenever you look at long-term performance. The Rs 10,000 crore-fund boasts of a below-average risk grade and above-average return grade. This makes it one of the popular funds among investors. As part of our exercise to review vintage equity funds with a legacy of their own, RupeeIQ takes a closer look at this product. Over the next paragraphs, we will explain the intricacies of the fund and help you make an informed decision. Read on.

Fund basics

Aditya Birla Sun Life Equity Fund is an open-ended multi cap fund. This means it invests across large cap, mid cap, small cap stocks. It is a diversified equity scheme that looks for opportunities without any sectoral or market cap bias. That is pretty standard across multi cap funds.

The fund seems to have done well by adopting the growth style of investing. There are some multi cap funds that strike a balance between growth and value such as HDFC Equity Fund.

We note that Aditya Birla Sun Life Equity Fund’s portfolio turnover at 60% is high among like-sized peers. But, some heavy-duty portfolio changes have also been implemented by Reliance Multi Cap Fund and Mirae Asset India Equity Fund.

The fund has been managed by Anil Shah since October 3, 2012. He also managed the Aditya Birla Sun Life Manufacturing Equity Fund and Aditya Birla Sun Life India GenNext Fund (co-managed with Chanchal Khandelwal).

Top 10 holdings of the fund (as on December 31, 2018) were HDFC Bank, ICICI Bank, Dr. Reddy’s, ITC, Tech Mahindra, Infosys, Tata Steel, Hindalco, PVR, and Tata Chemicals.

At the moment, Shah with the over 70-stock Aditya Birla Sun Life Equity Fund portfolio seems to be taking a different approach to the benchmark S&P BSE 200 TRI. Compared to the benchmark’s 86% large cap allocation, the fund has only 67%. While the benchmark has 13% allocation, the fund has 28%. Also, the benchmark has little exposure to small caps, but the fund has about 4% in small caps.

Performance

At RupeeIQ, we take a look at a fund’s absolute returns as well as SIP returns. Standalone fund returns do not matter much. So, we also take a look at a fund’s returns in relation to its benchmark and also peers.

Take a look at the fund’s 1, 3, 5 year and since inception returns. Also, see the benchmark show. As you can see the fund has comfortably beaten the benchmark in the long term periods. The one-year is too short a period to assess performance. In each time period of 3, 5, 10 year, the fund ranks in top 10 list.

Chart 1 - Aditya Birla Sun Life Equity Fund

The SIP performance matters too. Here, we find that the 3-year SIP hasn’t done as well as the benchmark. It is amply clear that the fund has been quite busy over the last three years, and the situation of markets have tested the fund. The longer-term SIPs have generated good wealth, underlining the strength of the fund as a long-term wealth creation avenue. Take a look at the SIP show below.

Chart 2 SIP - Aditya Birla Sun Life Equity Fund

Risk stats

The Aditya Birla Sun Life Equity Fund scores well on risk parameters. It has the 3rd highest Sharpe ratio among multi cap peers. It shows that the fund delivers more return per unit of risk taken. The fund also scores 4th highest on Sortino ratio. This means the fund has taken less amount of bad risks.

The fund’s R-Squared number tells us that it doesn’t move much like its benchmark. The fund manager’s current allocation shows how the fund likes to deviate from the benchmark. This is probably why the fund delivers returns that are markedly different from the benchmark. If you want a multi cap fund that moves a lot like its benchmark, you may consider Mirae Asset India Equity Fund, Franklin India Equity Fund or Kotak Standard Multicap Fund.

Rolling returns

The rolling returns picture gives a good idea about the stability of a fund’s returns. We compared Aditya Birla Sun Life Equity Fund with like-sized peers. The fund fares well. In fact, the return distribution shows that the fund is as good as the most stable peers like Mirae Asset India Equity Fund.

3-year rolling returns

28-Apr-2017 to 24-Jan-2019 Return Statistics (%) Return Distribution (% of times)
Fund Name Average Maximum Minimum Less than 0% 0 – 10% 10 – 20% 20 – 30% More than 30%
Motilal Oswal Multicap 35 Fund-Reg(G) 19.24 33.67 8.04 0 3.86 54.22 37.35 4.58
Franklin India Equity Fund(G) 12.11 22.4 5.61 0 37.35 59.28 3.37 0
Aditya Birla SL Equity Fund(G) 15.39 24.98 9.65 0 0.96 95.42 3.61 0
Reliance Multi Cap Fund(G) 9.1 18.94 3.93 0 66.99 33.01 0 0
Mirae Asset India Equity Fund-Reg(G) 15.07 22.64 10.27 0 0 96.63 3.37 0
Source: Rupeevest

RupeeIQ take – Aditya Birla Sun Life Equity Fund is one of the cheapest multi cap funds to own in the category. The fund has a good record of creating long-term wealth. With a fund manager who has been at the helm for over six years, the fund may be expected to deliver steady performance. We do not find the high portfolio overlap (53%) of the fund with Aditya Sun Life Frontline Equity concerning; the Frontline Equity fund is the flagship of the ABSL AMC and large-cap focussed. Since the Aditya Birla Sun Life Equity Fund has 66% large cap weight, it is natural that the best large cap stock picks of Frontline Equity will be reflected.

Disclaimer – Please note that investors are requested to consult their financial, tax and other advisors before taking any investment decision.

Author
Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. He can be contacted on contact@rupeeiq.com