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3
2012
Birla Sun Life Frontline Equity Fund Tags: should i invest in bsl frontline equity, is bsl frontline equity a good fund Date: Meta Description: BSL Frontline Equity Fund is a good fund to invest in Category: Mutual Funds
Analysis: Our recommendation for fresh investment: Yes Our recommendation for existing investment: Hold
Birla Sun Life Frontline Equity fund is one of the better performing funds in its category. This fund is managed by an experienced manager Mahesh Patil. Mahesh has over 20 years of experience in fund management, equity research and corporate finance. He has been managing the fund from 2005. It has been a consistent performer and has outperformed its benchmark BSE 200 every time but once in the last year in the past eight years.
Invest for what? You can invest in Birla Sun Life Frontline Equity fund to grow or create wealth. Do not look at making quick bucks here. Stay invested for long term. Birla Sun Life Frontline Equity is suitable for goals that is at least 5 years away from now. In case your goals are less than 5 years away, then we advise you to look at other options.
Where does this fund invest your money? Birla Sun Life Frontline Equity Fund is a large and mid cap fund which means most of your money will be invested in large and medium sized companies. Large cap companies tend to be stable compared to mid cap and small cap companies. This fund invests in approximately the same proportion as the sectors in the BSE 200 but at the fund manager’s discretion may choose stocks within a particular sector. Presently the portfolio has 83% exposure to large companies, 26% exposure to stocks of mid size companies and 1% exposure to stocks of small companies.
How much to invest? Minimum one time investment is Rs 5000 and minimum SIP is Rs 1000 per month. Do not make Birla Sun Life Frontline Equity as part of your core portfolio. Core portfolio is investments that are made for your basic goals and makes up about 70% of your investment portfolio. Birla Sun Life Frontline Equity Fund can be part of your satellite portfolio. Do not do the mistake of investing in too many mutual fund schemes. At any point of time do not have more than two mutual fund schemes in your core portfolio.
Past performance If you had invested Rs 1 lakh when the fund was launched in Aug 2002, your value of investments would be around Rs 8.3 lakhs. If you had invested Rs 1 lakh five years back it would have become Rs 1.5 lakhs. The performance has been better or similar to other large cap mutual funds. The fund has been giving at around 9% every year for those who stayed invested for last 5 years. Assume you had invested Rs 10,000 every month in Birla Sun Life Frontline Equity through SIP for the past 5 years today you would have around Rs 7.6 lakhs.
How will it perform in the future? Needless to say no one can predict the future of markets. We have firm belief in the future prospects of the Indian economy. If the Indian economy grows at 9% then the leading companies tend to de well. When the companies do well their stock prices follows their performance. So if you expect the economy to grow at 8% then you can expect top performing mutual funds to give you returns in excess of 14%. Mutual fund schemes that have exposure to mid size companies tend to show results when their bet on few companies comes true. We advise you to avoid too much of star gazing and future prediction. Be reminded that equities are one of the asset classes that have the potential to beat inflation. Your aim for core portfolio should be to beat inflation.
When to review the performance? Once you invest in the fund do not get into the habit of checking the NAV daily or monthly. Review the performance once a year. Too much attention is not good.
When to enter? Now! There is no good time to invest rather than now. Do not try to time the market and especially if it is an SIP. Do not follow news channel and other experts trying to know the right time to invest. In the long run it does not matter. Mutual fund is unlike a stock where you are looking at the right price. This job will be done by the mutual fund scheme manager. If you have planned your investments and decided on the amount you want to invest do not think further, just go ahead.
When to exit? Withdraw when your goals are closer to achievement. Do not remove the money when the markets go up or down. Do not panic. Stick to your goals.
What are the tax implications? The returns in a mutual fund are absolutely tax free, provided you did not withdraw within 1 year. Birla Sun Life Frontline Equity does not qualify for sec 80C ELSS benefits.
Better alternatives for core portfolio 1 DSP BlackRock Top 100 Fund 2 HDFC Equity Fund
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