Birla Sun Life Banking & Financial Services Fund

An open-ended equity scheme with a mandate to invest predominantly in equity and equity related securities of companies engaged in banking and financial services sector.

Summary

Type	An open-ended equity scheme	Benchmark Index	CNX Finance
Min. Investment:	lump sum -> Rs 5,000 and in multiples of Re 1 thereafter Systematic Investment Plan (SIP) Rs 1,000 each and above (minimum 6 instalments) *only monthly frequency is available	Minimum Additional Purchase:	Rs 1,000 and in multiples of Re 1 thereafter
Face Value	Rs 10 per unit	Options available:	Growth & Dividend (Payout and Reinvestment facility)
Entry Load	Nil	Exit Load:	2.00% if the units are redeemed/switched out within 365 days from the date of allotment 1.00% if the units are redeemed/switched out after 365 days, but within 730 days from the date of allotment Nil if units are redeemed/switched out after 730 days from the date of allotment
Issue Opens	November 25, 2013	Issue Closes:	December 09, 2013

Investment Objective*

The primary investment objective of the scheme is “to generate long-term capital appreciation to unit holders from a portfolio that is invested predominantly in equity and equity related securities of companies engaged in banking and financial services. The Scheme does not guarantee/indicate any returns. There can be no assurance that the schemes’ objectives will be achieved.”

*Source: Scheme Information Document

Is this fund for you?

Birla Sun Life Banking &Financial Services Fund (BSLBFSF) is an open-ended equity mutual fund scheme from the stable of Birla Sun Life Mutual Fund, having a mandate to invest predominantly in equity and equity related securities of companies engaged in banking and financial services sector. The banking and financial services sector has played a significant role in the development of trade, commerce and industry. This in turn has led to sector being very integral to the process of economic reforms and growth.

India’s banking and financial services sector stands on strong foundations of very prudent policy framework laid by the regulator(s). Hence even when the U.S sub-prime mortgage crisis occurred, followed by Lehman Brothers bankruptcy; India’s banking sector especially did show enormous resilience due to effective risk management measures adopted. Even today while we are feeling the shivers of the global economic headwinds flowing, along with anti-inflationary stance maintained by Reserve Bank of India (RBI), the underlying fundamentals of some banks and financial services companies makes the sector look promising.

But despite promising fundamentals of the sector (guided by policy framework), going forward banking and financial services sector stocks is likely to face the pressures of anti-inflationary stance adopted by RBI if inflationary pressures persist. Moreover, capital adequacy and the level of Non-Performing Assets (NPAs) are a major concern with the public sector banks off late. And with rating agencies being vigilant and active on these issues, they’ve flagged downgrades on some well-known Indian banks. The financial services industry too is sailing through turbulent times due to slowdown in the economy, which has a high probability of affecting bottom-lines of financial services companies if such a scenario continues for long.

Given the aforesaid scenario and the fact that the portfolio of BSLBFSF would be concentrated towards stocks in the banking & financial services sector, PersonalFN believes BSLBFSF would command very high risk and would not be suitable if one does not have a high risk appetite and risk tolerance. . Therefore before investing one’s hard earned money, it is imperative to take into account his / her risk appetite and risk tolerance.

Portfolio & Investment Strategy

BSLBFSF being a sector fund investing in stocks of companies in the banking & financial services sector would follow a top-down approach to stock picking. Also it will be actively managed to optimize returns, and income generation may only be a secondary objective. BSLBFSF would invest in the following amongst others:

• Banks
• Non-banking Financial Services Companies
• Housing Finance
• Wealth management
   

As the benchmark index – CNX Finance, is skewed in favour of few stocks, the fund could have substantial deviations from the respective weightage in the benchmark index so as to achieve diversification within the sector.

Under normal circumstances the asset allocation pattern of BSLBFSF will be as under:

Instruments	Allocation Range (%)		Risk Profile High/Medium/Low
	Minimum	Maximum
Equity and equity related instruments of Banking & Financial Services Companies	80	100	High
Cash, Money Market and Debt instruments	0	20	Low

(Source: Scheme Information Document)

Moreover, derivative instruments (as permissible under the applicable regulations) may also be held by BSLBFSF to hedge whole or part of the portfolio.

Fund Manager Profile

The fund’s investments will be managed by Mr Satyabrata Mohanty who has over 14 years of experience in the finance and research. Before joining Birla Sun Life Mutual Fund as a fund manager, Mr Mohanty has worked with Aditya Birla Management Corporation Ltd. He has to credit, graduation in commerce, CFA charter and is a Chartered Accountant (CA) from the Institute of Chartered Accountants of India (ICAI). At Birla Sun Life Mutual Fund he also manages Birla Sun Life MIP II - Savings 5 Plan, Birla Sun Life MIP, Birla Sun Life Advantage Fund, Birla Sun Life Gold Fund, Birla Sun Life Capital Protection Oriented Fund (Series 3, 4 and 9), Birla Sun Life Capital Protection Oriented Fund (Series 7 and Series 8), Birla Sun Life MIP II - Wealth 25 Plan, Birla Sun Life Monthly Income, Birla Sun Life Asset Allocation Fund and Birla Sun Life Nifty ETF.

Fund Outlook

BSLBFSF being a sector fund investing in the banking & financial services sector, will always feel the undercurrents of the banking & financial services sector, and would attract very high risk. The fortune of BSLBFSF would be closely linked with the performance of the banking & financial services sector.

To know whether to invest in this NFO please subscribe here. If you are already a subscriber then please login here

Disclaimer: This note / article is for information purposes and Quantum Information Services Limited (PersonalFN) is not providing any professional / investment advice through it. The recommendation service, views, articles and other contents are provided on an "As Is" basis by PersonalFN. The facts mentioned in the note are believed to be true and from a public source. The Service should not be construed to be an advertisement for solicitation for buying or selling of any scheme / financial product. PersonalFN disclaims warrants of any kind, whether express or implied, as to any matter/content contained in this note, including without limitation the implied warranties of merchantability and fitness for a particular purpose. PersonalFN and its subsidiaries / affiliates / sponsors / trustee or their officers, employees, personnel, directors will not be responsible for any direct/indirect loss or liability incurred by the user as a consequence of his or any other person on his behalf taking any investment decisions based on the contents of this note. Use of this note is at the user's own risk. The user must make his own investment decisions based on his specific investment objective and financial position and using such independent advisors as he believes necessary. PersonalFN does not warrant completeness or accuracy of any information published in this note. All intellectual property rights emerging from this note are and shall remain with PersonalFN. This note is for your personal use and you shall not resell, copy, or redistribute this note, or use it for any commercial purpose. Please read the terms of use.

Add Comments