32
Birla Sun Life Equity Fund : Strategy & View
Fund Manager:
Anil Shah
The fund is a flexi cap equity fund that looks for opportunities without any sector or market cap bias
with an aim to provide long term growth of capital. To construct the portfolio, the fund manager
applies mix of top-down and bottom-up investment approach and aims to maintain diversification
across various sectors and market capitalization. The fund manager uses top-down investment
approach to evaluate global and Indian macro-economic condition and accordingly overweight or
underweight sectoral positions are taken. The bottom-up investment approach is used to select
stocks within the selected sectors and invest in companies which have strong fundamentals,
potential to generate free cash flows, low leveraged balance sheet and are available at reasonable
valuations. The fund manager also looks at parameters like competitive advantage, entry barriers
in business and companies which have enough installed capacity to meet the growing demand.
As per the fund manager, the Union Budget for FY18 was a prudent budget as it emphasized on
investment while sticking to fiscal consolidation. The government has targeted the fiscal deficit
at 3.2% of GDP (Gross Domestic Product) for FY18 and 3% of GDP for FY19. The budget mainly
focused on growth in rural economy, support to MSME (Micro, Small and Medium Enterprises),
affordable housing, digitization and infrastructure development to boost the economic growth. As
per the fund manager, government is working in right direction to bring transparency, improve
tax compliance and curb the black economy with the help of various measures. Reforms like
demonetization and implementation of Goods & Services Tax (GST) Bill is likely to integrate the
parallel economy into mainline economy and bring more number of people in the tax net. As per
the fund manager, market may remain volatile in the near term due to state elections in domestic
market and policy measures by developed economies. However, the fund manager expects the
market to deliver better returns over the medium term on back of revival in earnings growth led by
expected improvement in consumption demand. The fund manager is positive on Private Sector
Banks with more focus on retail oriented Banks and has highest exposure in Banking sector. The
other top sectoral holdings are Pharma, Oil & Gas, FMCG, and Auto & Auto Ancillaries. Currently,
the fund has around 76% exposure in large cap stocks, around 12% exposure in mid & small cap
stocks and close to 12% exposure in debt & cash. The portfolio of the fund is diversified across
65-70 stocks. Currently, the top 10 stocks comprises of around 33% of the portfolio. The fund is
recommended for moderate & aggressive investors with an investment horizon of 2-3 years.
SBI Magnum Multi Cap Fund : Strategy & View
Fund Manager:
Anup Upadhyay
The fund is a flexi cap equity fund and can be classified as analysts’ portfolio, as the fund is being
managed by the fund manager with higher involvement of a team of analysts. These analysts are
experts in their respective sectors and select high conviction stocks with bottom up investment
approach. The fund manager primarily looks at overall risk management and portfolio construction.
The fund can take overweight/underweight position in sector with a deviation of 2.5% to sectoral
weightage in benchmark index. As a stock selection process, fund manager invests in companies
which follow good corporate governance, have less leveraged balance sheets and are able to generate
regular cash flows. Indian equity markets closed on a positive note in the month of January 2017
with S&P BSE Sensex rising by around 4%. As per the fund manager, up-move in the market was
mainly on back of factors like buying by DIIs in Indian equity market during the month, anticipation
over the positive announcements in the Union Budget for FY18 and better than expected corporate
earnings growth in Q3FY17. As per the fund manager, Union Budget for FY18 indicated government’s
commitment towards fiscal consolidation while allocating resources to infrastructure development,
affordable housing and growth of rural economy. The budget also focused on insurance for agricultural
activities, digitization, better road connectivity, rural electrification, direct transfer of benefits and
employment generation (via MGNREGA) programme which are likely to boost the growth of rural
economy. As per the fund manager, market may remain volatile in the near term due to factors like
corporate earnings growth trajectory, execution of the proposed budget, outcome of state elections,
development over the implementation of Goods & Services Tax (GST) Bill and policy measures by
the US government. However, the fund manager is of the view that India is relatively better placed
compared to other emerging markets to handle such situation given its healthy macro-economic
parameters. Further, low interest rate scenario, simplified taxation structure with the help of GST
reform and increased government revenues on sustainable basis are likely to boost the economic
growth over long term. The fund manager is positive on Banking sector and has highest exposure
in it. The other top sectoral holdings are FMCG, Oil & Gas, IT and Auto & Auto Ancillaries. The fund
also maintains the diversification across market capitalization. Currently, the fund has around 71%
exposure in large cap stocks, around 18% exposure in mid cap stocks and around 7% exposure in
small cap stocks. The fund is recommended for moderate & conservative investors, with a 2-3 years
investment horizon
M
utual
F
und
S
ynopsis
- E
quity
F
unds
as
on
31
st
J
anuary
, 2017
Top Holdings as on 31st January 2017
Company
%
HDFC Bank Ltd.
5.12
Cairn India Ltd.
3.84
Tata Chemicals Ltd.
3.83
Maruti Suzuki India Ltd.
3.26
Dr Reddys Laboratories Ltd.
2.91
Total
18.96
Sector
%
Banks & Finance
25.70
Pharma
9.86
Oil & Gas, Energy
9.27
FMCG
8.11
Auto & Auto Ancillaries
7.24
Total
60.18
Debt & Cash
12.06
Top Holdings as on 31st January 2017
Company
%
HDFC Bank Ltd.
4.93
State Bank of India
4.17
Mahindra & Mahindra Financial
Services Ltd.
3.82
Equitas Holdings Ltd.
3.61
Infosys Ltd.
3.30
Total
19.83
Sector
%
Banks & Finance
26.04
FMCG
11.24
Oil & Gas, Energy
10.08
IT
9.32
Auto & Auto Ancillaries
9.22
Total
65.91
Debt & Cash
3.87
Source for entire data stated above is ICRA Online Ltd. (For Disclaimer of ICRA Online Ltd, refer
