Birla Long Term Advantage Fund (BLTAF) is a close-ended diversified equity fund with a 5-Yr lock-in; subsequently it will be converted into an open-ended fund. The fund will be truly diversified i.e. it will embrace the growth and value style of investing and invest across market segments (large cap, mid cap, small cap).
Equities as an asset class are best equipped to deliver over longer time frames and close-ended funds propagate this cause. Close-ended funds not only keep investors invested for longer durations (5-Yr in this case), they also enable the fund manager to take a long term view on investments by being indifferent to short-term market fluctuations and redemption pressures.
If you ignore its close-ended nature, BLTAF is just another fund in the already extended list of equity funds in Birla Sun Life AMC's (Asset Management Company) portfolio. Presently, Birla Sun Life AMC holds a mammoth portfolio of 16 open-ended equity funds, although admittedly some of them are from its recent acquisition of Alliance Capital Mutual Fund. One of the existing equity funds could have been made into 'a free-flowing investment style fund' that BLTAF proposes to be. Hence, launching another equity-oriented fund although close-ended in nature (with 5-Yr tenure) is rather baffling.
BLTAF's investment mandate of investing across market segments makes the fund similar to flexi cap funds or opportunities funds. Hence, the investment proposition of the fund cannot be considered as unique as investors already have a range of existing, well-managed flexi cap/opportunities fund at their disposal.
BLTAF offers redemption option to the investors for a period of 5 business days every month commencing from the first business day of each month after the date of allotment. Though there is no exit load, the proportionate unamortised initial issue expense will be recovered from the investors for an early redemption.
In our view, investors should avoid investing in BLTAF as it has little value add to offer. Instead they can consider investing in well-managed flexi cap/opportunities funds (with established track records) like DSP ML Opportunities (which is open-ended) for instance.
