Finance Minister Arun Jaitley delivered a budget focused on rural India on the 1st of February. If the idea of benefiting from rural consumption and infrastructure development interests you, then Aditya Birla Resurgent India Fund – Series 6 may well be the fund for you.
Its promotional video argues that that the government’s focus on rural India will boost farm and non-farm productivity. This will lead to a rise in incomes and consumption and (rather confusingly) accelerate the shift towards urbanisation. To benefit from these trends, the fund proposes to invest in sectors such as auto and auto ancillaries, agro inputs, consumer discretionary goods, banking and financial services and building materials.
The Scheme Information Document (SID) of the fund identifies a whole series of macroeconomic factors for investing in the fund including portfolio inflows, demonetisation, rural jobs, Smart Cities, Make in India, GST, Digital India, PMI and inflation outlook.
This fund is not the first of its kind. Five such schemes have been launched before it, as part of the same series starting about one and a half years ago in September 2016. Their performance so far has been underwhelming though. However, it can doubtlessly be argued that time-frames of 3 months to 1 year are far too short to judge a fund on.
|Series||Launch Date||Return Period||Return||Benchmark Return||Outperformance?|
|1||14th Sept 2016||1 year||16.63%||17.64%||No|
|2||19th Nov 2016||1 year||14.50%||17.64%||No|
|3||15th March 2017||6 months||9.81%||5.70%||Yes|
|4||7th July 2017||6 months||4.99%||5.70%||No|
|5||4th Oct 2017||3 months||-1.44%||-0.6%||No|
|6||Aditya Birla Resurgent India Fund – Series 6|
Source: Value Research. Data as on 22nd February 2018. Returns not annualized for less than one year. Benchmark for all the series funds (except Series 6) is BSE 200. Tenure for all series is 1275 days (except series 3 which was 1277 days).
Closed-ended funds are good for individuals who might otherwise be tempted to jump in and out of open-ended funds as the market fluctuates. On the other hand, these funds pick arbitrary time periods – 3 years, 3.5 years, 10 years and so on for their duration which may not really correspond with your goals or act as good entry and exit points. For instance, what if the market stagnates for the next 4 years and then has a massive rally in the 5th? They also effectively lock-up your money for their duration, which as mentioned above can be a good or bad thing.
On the other hand, the rural consumption theme is an alluring one. The government’s push is indeed on Bharat and there may be plenty of investment opportunities there. Make up your mind after considering all of these factors.
Tenure: 3.5 years
Options: Growth, Dividend Payout, Dividend Sweep (This option automatically invests the dividend in another open-ended scheme of Aditya Birla Mutual Fund. The dividend has to be above Rs 1,000 for the facility to apply or it is reinvested in the existing fund/paid to the investor at his option)
Minimum Investment: Rs 1000
Entry and Exit Load: None
Fund Managers: Satyabrata Mohanty and Milind Bafna
Benchmark: S&P BSE 500
NFO Period: Feb 21st to March 7th
Our other NFO coverage
Note: Mutual fund investments are subject to market risks. Read all scheme related documents carefully. Talk to your financial advisor before investing.