Aditya Birla Resurgent India Fund Series – 7 follows in a long line of closed-ended funds from Aditya Birla. Like its immediate predecessor, Aditya Birla Resurgent India Series 6, is a diversified equity scheme and focuses on the rural economy and a turnaround in rural consumption.
It is an equity fund but can place up to 20% of its corpus in debt. The fund cites a host of factors as the reasons for its existence from demonetisation to MNREGA and GST. It expects a turnaround in India’s rural economy and will try to position itself to benefit from it. The fund has a tenure of 3.5 years.
One way of evaluating the fund is to examine how previous funds in the series have performed. The first five funds in the series (Series 1 – 5) use the S&P BSE 200 as their benchmark whilst the most recent fund (Series 6) uses S&P BSE 500. This NFO (Series 7) also uses the S&P BSE 500. Series 1 to Series 5 funds have a more large-cap orientation than Series 6 and 7. They are therefore less useful for evaluating this NFO.
Also note that due to relatively recent launch dates, it is far too early to use the performance of these funds as a conclusive barometer for the current NFO. This performance compared to the benchmark fluctuates widely based on the date chosen.
Here is the fund performance:
|Fund Series||Launch Date||Period||Return||Benchmark %||Outperformance?|
|1||14th Sept 2016||1 year||13.09||12.90||Yes|
|2||19th Nov 2016||1 year||12.59||12.90||No|
|3||15th March 2017||6 months||5.44||1.55||Yes|
|4||7th July 2017||6 months||2.67||1.55||Yes|
|5||4th Oct 2017||3 months||-3.42||-4.98||Yes|
|6||7th March, 2018||17 days||-1%||N/A||N/A|
Source: Value Research. Data as on 23rd March, 2018. Returns not annualized for less than one year. Tenure for all series is 1275 days (3.5 years) except series 3 which was 1277 days.
Closed-ended funds are a good option if you are likely to jump in and out of open-ended equity funds due to temptation or fear. They are a way of tying your own hands so that you do not damage your returns and they can work well for this reason.
The lack of redemption pressures can also help the fund manager manage money more efficiently.
On the flip side, you do compromise on your own liquidity. In addition, the term of the fund places a somewhat arbitrary constraint. If the market sinks in the third year and rallies in the fourth, the design of the fund forces you to take losses.
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 1,000
Entry and Exit Load: None
Fund Managers: Satyabrata Mohanty and Milind Bafna
Benchmark: S&P BSE 500
NFO Period: 20th March to April 3rd