Birla Sun Life Frontline Equity Fund: A consistent performer charged up on energy

What makes a scheme attractive in volatile times? It is largely its ability to provide consistent returns even in falling markets. One of the few schemes which have demonstrated this trait for a long time is Birla Sun Life Frontline Equity. Managed by Mahesh Patil, this scheme is predominantly focused on large caps (over 85%). Having a performance record of over 10 years, the fund has consistently beaten its benchmark S&P BSE200 by a considerable margin.

The scheme’s fund manager picks up stocks with a few factors in mind. These are growth at a reasonable price, distinguished competitive edge of a company in its industry, special focus on corporate governance and attractive valuations. Due to these factors, the scheme has outperformed its peers in the past ten years.

At present, the fund manager has enhanced its allocation to energy segment and some contrarian investment themes. One of the them is oil & gas. With the deregulation of diesel, which would boost earnings growth, analysts expect a few more earnings-enhancing developments such as high marketing and refinery margins, volume growth and lower inventory losses. In terms of contrarian theme, the fund manager has bought Hero Moto. Even though Hero’s earnings may be depressed in the short-term, its long-term prospects of strong revenue growth driven by brisk sales are good.