The size of Aditya Birla Sun Life Frontline Equity Fund has grown multi-fold in the last couple of years, and is now the largest fund in its category. With a corpus of well over Rs 21,000 crore, the fund is slowly moving towards a point where it may start feeling capacity constrain. However, it is not reflected in its performance yet. With a large cap focus, the fund seems to have a long way ahead.

Aditya Birla Sun Life Frontline Equity Fund has an equally stable fund management at the fore. Mr Mahesh Patil has been the fund manager of the fund for well over a decade and has successfully steered the fund through multiple market cycles.

Fund Facts – Aditya Birla SL Frontline Equity Fund

Category	Large Cap Fund	Style	Growth
Type	Open ended scheme	Market Cap Bias	Large Cap Fund
Launch Date	30-Aug-02	SI Return (CAGR)	21.54%
Corpus (Cr)	Rs 21,380	Min./Add. Inv.	Rs 500 / Rs 500
Expense Ratio (Dir/Reg)	1.31% / 2.19%	Exit Load	1%

Portfolio Data as on July 31, 2018.
SI Return as on August 13, 2018.
(Source: ACE MF)

Growth Of Rs 10,000, If Invested In Aditya Birla SL Frontline Equity Fund 5 Years Ago

Aditya Birla SL Frontline Equity Fund: Year-on-Year Performance

Moreover, the fund has been able to outperform the benchmark and its peers in bull market phases as well. With superior performance on either side of the market, Aditya Birla SL Frontline Equity Fund has been rewarding over longer periods. However, in the recent large cap rally (seen over the last 6 months), the fund has trailed the benchmark - Nifty 50 - TRI by a noticeable margin of 7 percentage points.

Aditya Birla SL Frontline Equity Fund: Performance Vis-à-vis Category Peers

Scheme Name	Corpus (Rs Cr)	1 Year (%)	2 Year (%)	3 Year (%)	5 Year (%)	Std Dev	Sharpe
Indiabulls Blue Chip Fund	402	19.67	19.27	13.56	15.77	13.81	0.12
Essel Large Cap Equity Fund	151	17.12	17.96	13.23	15.62	12.82	0.10
SBI BlueChip Fund	20,284	16.94	16.92	13.18	19.45	11.74	0.09
ICICI Pru Bluechip Fund	18,747	19.95	19.47	12.35	18.19	12.24	0.11
Reliance Large Cap Fund	10,898	21.20	19.74	12.17	19.62	13.98	0.08
Invesco India Largecap Fund	152	18.85	17.10	12.03	17.93	11.84	0.13
Aditya Birla SL Frontline Equity Fund	21,380	16.88	17.89	12.00	18.41	12.53	0.09
Axis Bluechip Fund	2,568	25.11	17.91	11.30	17.34	12.69	0.15
Kotak Bluechip Fund	1,424	16.51	15.79	11.19	16.56	12.48	0.08
HSBC Large Cap Equity Fund	730	18.19	18.96	11.18	15.42	12.96	0.11
Tata Large Cap Fund	803	16.58	16.04	10.75	15.93	12.40	0.06
DHFL Pramerica Large Cap Fund	414	16.86	15.83	10.69	17.02	12.25	0.08
Canara Rob Bluechip Equity Fund	132	18.48	17.24	10.59	15.48	13.31	0.09
Edelweiss Large Cap Fund	141	20.23	16.92	10.53	16.77	13.09	0.09
Franklin India Bluechip Fund	8,108	13.97	14.68	10.32	15.35	11.80	0.05
HDFC Top 100 Fund	15,261	16.65	19.20	10.27	16.43	15.47	0.07
IDFC Large Cap Fund	373	20.05	18.83	10.08	14.15	12.67	0.11
BNP Paribas Large Cap Fund	893	17.81	14.69	10.00	17.81	13.57	0.03
IDBI India Top 100 Equity Fund	417	14.19	14.49	9.62	16.12	12.86	0.02
UTI Mastershare	5,531	17.33	15.53	9.60	16.08	11.99	0.07
L&T India Large Cap Fund	424	15.95	14.90	9.17	16.31	12.90	0.03
DSPBR Top 100 Equity Fund	3,008	14.05	15.82	9.11	14.29	13.75	0.04
LIC MF Large Cap Fund	245	15.36	14.30	8.35	15.14	12.53	0.03
Taurus Largecap Equity Fund	39	11.04	11.95	7.34	12.84	13.51	-0.03
JM Large Cap Fund	2,818	12.88	12.23	7.26	14.28	10.66	0.00
Baroda Pioneer Large Cap Fund	30	11.24	14.86	6.76	14.63	15.03	0.00
NIFTY 50 - TRI		18.88	16.71	9.14	14.13	12.66	0.10

Returns are on a rolling basis and those depicted over 1-Yr are compounded annualised.
Data as on August 13, 2018
(Source: ACE MF)

*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

With an AUM of Rs 21,380 crore, Aditya Birla SL Frontline Equity Fund is currently the largest fund in the large cap funds category. It has done well to outscore the benchmark over longer rolling periods, by a significant margin, and has also managed to outpace the category average returns. Over the 3-year & 5-year rolling periods, the fund has outperformed the benchmark by 3 to 4 percentage points. However, over shorter periods, its performance has not been very impressive. In the 1-year rolling periods, the fund has trailed the benchmark and some of its prominent peers as well.

Nonetheless, Aditya Birla SL Frontline Equity Fund does not disappoint its investors on the risk-adjusted returns front. When it comes to managing the downside risk, the fund has stood among above average performers. Its returns have come at a lower volatility, resulting in respectable risk-adjusted returns for its investors. Its Risk Adjusted Return (Sharpe Ratio) of 0.09 is not among the highest in the category, but is nearly in line with the benchmark and higher than the category average.  

While the long term performance track record of Aditya Birla SL Frontline Equity Fund still gives confidence to investors, it is to be seen if the fund can sustain its long term performance and improve on the risk-adjusted returns front.  

Investment Strategy of Aditya Birla SL Frontline Equity Fund

Aditya Birla SL Frontline Equity Fund predominantly invested in large-cap stocks present in the S&P BSE 200 index. However, post re-categorization, the investment universe of the fund is trimmed to the Top 100 companies by market capitalization. Nevertheless, the funds average exposure to large-caps has always remained over 80% since inception. So the new norm would not have much impact on its investment strategies. Aditya Birla SL Frontline Equity Fund aims to generate market-beating returns by following a fundamental driven research approach. It follows top-down and bottom-up approach to investing.

Aditya Birla SL Frontline Equity Fund - Portfolio Allocation and Market Capitalisation Trends

Being a large cap oriented fund, Aditya Birla SL Frontline Equity Fund maintains a stable allocation to large cap stocks. For most of the past year, the fund maintained an exposure of around 85% to large-caps, while mid-caps stood in the range of 8%-11% of its assets. The fund resists from holding any small cap stocks in its portfolio. As on July 31, 2018, Aditya Birla SL Frontline Equity Fund maintained an allocation of around 84% to large-caps and around 10% in mid-caps. The non-equity holding has been well below the 10% mark.

Aditya Birla SL Frontline Equity Fund – Top Portfolio Holdings

Top 10 Stocks Stocks % of Assets HDFC Bank Ltd. 8.40 Infosys Ltd. 5.10 ICICI Bank Ltd. 5.05 ITC Ltd. 4.76 Larsen & Toubro Ltd. 3.29 Maruti Suzuki India Ltd. 2.93 HDFC Ltd. 2.51 Yes Bank Ltd. 2.40 State Bank Of India 2.29 Mahindra & Mahindra Ltd. 2.23	Top 5 Sectors
Holdings (in %) as on July 31, 2018 (Source: ACEMF)

Aditya Birla SL Frontline Equity Fund makes well use of diversification to mitigate the downside risk. As on July 31, 2018, it held 72 stocks in the portfolio reasonably diversified across prominent large cap stocks and host of sectors. Large cap names like HDFC Bank, Infosys, ICICI Bank, ITC, L&T, HDFC Ltd., SBI etc. have been among the core top contenders in the fund's portfolio for quite a long time. The top 10 holdings in the fund's portfolio accounted for about 39% of its assets.

Banking and Financials dominate Aditya Birla SL Frontline Equity Fund's portfolio, together accounting for over 36% of it assets, followed by Consumption, Technology and Auto. The funds bias towards cyclicals reflects its growth style of investing aiming for long term capital appreciation. Engineering, Pharma, Energy and Utility have been among the other prominent sectors in the fund's portfolio.

Major Gainers: In the last one year, Aditya Birla SL Frontline Equity Fund had equal number of gainers as well as losers in its portfolio. Against 25 stocks that ended in positive, 26 stocks ended in red. Tech Mahindra, Titan and Britannia Industries turned out to be major gainers in the funds portfolio appreciating in the range of 65-80%. Bajaj Finance, TCS and Hindustan Unilever held by the fund gained 50-60%. Some other stocks in the fund’s portfolio like Reliance Industries, Sanofi India and Dabur India are up over 35%, in a year’s time.

Major Losers: Among the list of losers, the fund held Reliance Capital, Idea Cellular, Tata Motors, Cummins India, Bharat Electronics, HPCL and CG Power & Industrial Solutions. Each of these stocks lost over 25% in value. However, the fund has hardly held over 1% exposure in any of these stocks.

Suitability of Aditya Birla SL Frontline Equity Fund

Aditya Birla SL Frontline Equity Fund is driven more by its astute stock picking approach and buy and hold investment strategies. Going by its name, the fund keeps its major focus on frontline large cap stocks, along with diversification across large cap universe. The penchant to hold slight exposure to larger mid-cap names makes the fund slightly aggressive as compared its pure large cap peers. With an experienced fund manager at the helm, the fund has been far from disappointing its investors in terms of risk-reward over longer time periods. With growing size, the fund may be on its way to face capacity constrain at some point. However, its large cap focus can still accommodate more investors without any pressure on its performance.

Large cap funds can be considered as a great investment avenue for long-term investors who aim to grow their wealth but with some element of stability. They have the potential to generate steady returns for those looking for decent returns but want to assume relatively lesser risk. Although they aren’t very appropriate for aggressive investors willing to take higher risk for higher returns, it is always advisable to have significant exposure to large caps, as they could not only add the much needed stability to the portfolio, but may also reward in conditions like these.

Note: This write up is for information purpose and not a recommendation to buy or sell the mutual fund scheme. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your financial planner or investment advisor.

DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014  

About the Company including business activity 

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989. 

QIS was promoted by Mr. Ajit Dayal with an objective of providing value-based information / views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services. 

Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.

Disciplinary history

There are no outstanding litigations against the Company, it subsidiaries and its Directors. 

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Details of associates

1. Money Simplified Services Private Limited;
2. PersonalFN Insurance Services India Private Limited;
3. Equitymaster Agora Research Private Limited;
4. Common Sense Living Private Limited;
5. Quantum Advisors Private Limited;
6. Quantum Asset Management Company Private Limited;
7. HelpYourNGO Private Limited;
8. HelpYourNGO Foundation;
9. Natural Streets for Performing Arts Foundation;
10. Primary Real Estate Advisors Private Limited;
11. Rahul Goel;
12. I V Subramaniam.

Disclosure with regard to ownership and material conflicts of interest

1. Neither QIS, it’s Associates, Research Analyst or his/her relative have any financial interest in the subject Company , except QIS receives fees for providing research to Quantum Equity Fund of Fund (QEFoF) which is Fund of Fund scheme managed by QMF.
2. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report.
3. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront /annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices

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1. The Research Analyst has not served as an officer, director or employee of the subject Company.
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Subject Company means Mutual Fund Schemes

Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021 Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021. Email: info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222

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