Birla Dividend Yield Plus Fund is an open ended equity fund with a primary objective of providing capital growth and income by investing in a well-diversified portfolio.
Birla Dividend Yield Plus Fund is an open ended equity fund with a primary objective of providing capital growth and income by investing in a well-diversified portfolio of companies that have a relatively high dividend yield.
According to the fund’s investment policy, any stock yielding more than 2% of the prevailing BSE Sensex’s dividend yield would be qualified as an investment stock.
Though this investment criterion is common across dividend yield funds, it is quite stringent for this fund.
Currently there are around 142 stocks in the benchmark S&P CNX 500 index which meet the fund’s dividend criteria. Most of these stocks are from oil & gas, fertilizers, consumer non durables and pharmaceuticals sectors.
These sectors have been laggards for the last two years and hardly any stock from these sectors has been able to generate returns comparable to the benchmark.
The presence of so many underperforming sectors in the portfolio has dragged the fund’s returns.
The top five sectors for last two years have been the banking (mainly PSU players), consumer non durables, pharmaceuticals, petroleum products (mainly PSU refineries) and fertilizers. These five sectors and they have accounted for around 45-50% of the portfolio in the last two years.
Though the sector allocation for the fund has been concentrated, the portfolio composition has been diverse and comparatively stable.
In the last two years, it has had exposure to around 100 stocks. Also these stocks have, on an average, accounted for around 70% of the portfolio, indicating a comparatively low churn.
The one-year returns of around 25.08% for the fund make it among the bottom 10 in terms of returns in the equity diversified category.
The scheme is ranked 122 out of 127 funds with a one year track record.
The fund’s past performance has not been good and understandably so considering its stringent valuation mandate and the limited investment universe.
However, its ability to curb excess volatility in the portfolio has been remarkable. So, for an conservative investor, the fund might a good bet.
By arrangement with mutualfundsindia.com, a unit of Icra Online
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