Summary

Type	Open ended equity (diversified)	Benchmark	S&P CNX Nifty
Min. Investment	Rs 5,000	Face Value	Rs 10
Entry Load	2.25% (maximum)	Exit Load	1.00%*
Issue Opens	June 14, 2005	Issue Closes	July 12, 2005
*On exit within 6 months from date of allotment

Investment Objective

To target growth of capital by investing in equity/equity related instruments of companies that are expected to benefit from the rising consumption patterns in India, which in turn is getting fuelled by high disposable incomes of the young generation (Generation Next). The scheme will invest in companies that have the following characteristics: Companies that seek growth in revenues arising out of demand from the younger generation (GenNext) for their products or services. They should be engaged in manufacturing of products or rendering of services that go directly to the consumer. The products and services should have distinct brand identity, thereby enabling choice.

Is this fund for you?

Birla India GenNext Fund (BIGF) aims to capitalise on the buying power of the Indian youth. At a time when flexi cap/mid cap funds are dominating the investor's mind, BIGF offers a different investment proposition. The fund intends to target companies that will benefit from the consumption patterns triggered by the youth, thereby benefiting from this trend which in their view is likely to remain on the upswing going forward. BIGF defines Generation Next (GenNext) as that segment of the population which was born in the eighties and nineties; a majority of these individuals will be in their twenties and thirties in the next 10-15 years. The fund draws from the opportunity that presented itself in the US over the last sixty years or so. The US witnessed a surge in population at the end of the Second World War. As this new generation progressed in its life cycle, the demand for products and services bulged according to the needs of this 'group'. So when they entered the working age group, and started to earn, spending increased in the US. So did the demand for consumer goods and services. Now when they are retiring for instance, the demand for healthcare and pensions is witnessing fast growth. In India, while there has been no 'baby boomer' generation, as it was called in the US, there is unfolding a change in the composition of the population. Over the next couple of decades or so, the proportion of population that will be in the 'working age' group will be the highest. This basically means that more people will be earning,leading to higher disposable incomes (as the number of dependents per 'earner' decline). This higher disposable income is what is likely to trigger demand in those sectors which cater to the needs of this 'group' of consumers. As is the case with theme-based funds, the fund's investment objective can become a restricting factor and limit the choices available to the fund manager. In terms of sectoral diversification, the fund will have limited options as opposed to a conventional diversified equity fund. In terms of a value proposition, the fund's innovative theme can certainly add value to the high-risk investor's portfolio. However, there are certain high-growth industries like software and engineering/basic industries that do not necessarily target the youth. BIGF's restrictive investment mandate could mean that the fund misses out on investing in these potentially lucrative sectors.

Portfolio Strategy

BIGF's investment objective explicitly lays out its area of operations. The fund will invest in companies which target Generation Next. These companies would have at least 50% of their revenues from sales to end-customers; also these companies will possess a distinct brand identity and cater to lifestyle needs. Instruments Allocation   Range Normal Equity and equity-related securities 80%-100% 90% Money market instruments 0%-20% 10% BIGF is mandated to invest between 80-100% of its net assets in equities while upto 20% can be invested in money market instruments. The fund has indicated that the normal investment level will be 90% for equities and the balance (10%) in debt instruments.

Fund Manager Profile

Mr.Nishid Shah is the Chief Investment Officer (CIO) - Birla Sun Life Mutual Fund and has over 20 years of experience in the financial services industry. Before joining Birla AMC he was associated with Motilal Oswal Securities as Chief - Equity Research. Prior to that, he worked with A. F. Ferguson, Lovelock & Lewes, Coopers & Lybrand and Rhone Poulenc (India) Ltd. He manages Birla Advantage, Birla Midcap, Birla Equity Plan and Birla MNC among others.

Outlook

Over the past few years, the fund house has witnessed a fair degree of change in its fund management team. Frequent changes at the helm have deprived the fund house of continuity and stability in its fund management style. Secondly, the performance of diversified equity funds from the Birla Sun Life Mutual Fund stable over the long-term (3-5 years) has been rather modest vis-à-vis that of its peers and fails to inspire confidence. BIGF holds the potential to be a unique investment proposition which is perceptibly different from its peers; also the concept can add significant value to investors over the longer time horizon. However given the fund house's lackluster history, its execution of this idea will have to be scrutinised. We recommend that investors keen on participating in the scheme should do so only after factoring in the aforementioned aspects. Download PDF   Looking to invest? Meet a Personalfn consultant today! Download form | Why Personalfn? Ahmedabad 6450-5215 Bangalore 6535-9899 Chennai 6526-2621 Chandigarh 653-5304 Hyderabad 6591-8423 Jaipur 650-1396 Mumbai 6799-1234 New Delhi 6450-5302 Pune 6400-2434 Click on the city name to write to us

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