Aditya Birla Sun Life Frontline Equity: One of the best large cap mutual funds

Over the past few years, we have reviewed a number of large cap funds for the benefit of our readers. One scheme which stood out for its performance consistency over the last 3 to 4 years was Aditya Birla Sun Life Frontline Equity Fund. In the last 4 years, Aditya Birla Sun Life Frontline Equity Fund consistently ranked in the top two performance quartiles (please see our Top Consistent Mutual Fund Performers tool). The chart below shows the annual returns of the fund over the last 5 years.

Source: Advisorkhoj Research

Fund Overview

Aditya Birla Sun Life Frontline Equity Fund was launched in 2002 and has as Rs 19,935 Crores of Assets under Management (the AUM of the scheme has grown around 30% in less than a year). The expense ratio of the fund is 2.12%. The fund has given 22% annualized returns since inception. Industry veteran Mahesh Patil has helmed this fund since 2005. The chart below shows the NAV growth of Birla Sun Life Frontline Equity Fund over the last 5 years.

Source: Advisorkhoj Research

The chart below shows the performance of the scheme versus its benchmark over the last 5 years.

Portfolio Construction

Aditya Birla Sun Life Frontline equity fund is predominantly invested in companies from S&P BSE 200 index. At times, the fund also goes beyond top 200 stocks if it finds a higher growth potential.Diversification across industries and sectors brings stability to the fund’s portfolio and makes it a fund for all seasons. In terms of industry weightage, the fund invests approximately in the same proportion as the industries in the S&P BSE 200. This helps you take advantage of growth in industries across the spectrum.

The scheme tries to maintain sector exposure within a certain range of sectoral weight in the benchmark index i.e. S&P BSE 200, in order to ensure diversification and avoid excessive concentration in a single sector. This discipline also reduces overdependence on a particular industry with an aim to provide stability to the investment portfolio. The chart below shows the top sectors and stock concentrations of Aditya Birla Sun Life Frontline Equity Fund.

Source: Advisorkhoj Research

SIP Returns

The chart below shows the growth of Rs 5,000 monthly SIP in Birla Sun Life Frontline Equity Fund over the last 5 years (period ending November 30, 2017).

Source: Advisorkhoj Research

By investing Rs 5000 in Birla Sun Life Frontline Equity Fund (Growth Option) you could have accumulated a corpus of Rs 4.73 Lakhs in the last 5 years with a cumulative investment of only Rs 3 Lakhs.

The chart below shows the growth of Rs 1 Lakh lump sum investment in Aditya Birla Sun Life Frontline Equity Fund over the last 5 years (period ending November 30, 2017).

Dividend Payout Track Record

Aditya Birla Sun Life Frontline Equity Fund, Dividend Option has a strong dividend payout track record since its inception, even during bear markets. The dividend yield over the last 5 years or so is also quite good.

Conclusion

Aditya Birla Sun Life Frontline Equity Fund has a glorious track record of more than 15 years. The fund manager has a disciplined approach and done an admirable job in ensuring performance consistency. This fund is suitable for investors looking for high capital appreciation over a long time horizon, for long term financial objectives, such as retirement planning, children’s education etc. Investors can consider investing in the scheme through the systematic investment plan (SIP) or lump sum mode with a long time horizon. Investors should consult with their financial advisors, if Birla Sun Life Frontline Equity Fund is suitable for their financial planning objectives.