Birla Sun Life Medium Term Plan

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Birla Sun Life Medium Term Plan is a medium term debt fund launched on the 25th of March, 2009. This mutual fund scheme looks to generate regular income and maximise returns by selectively investing in debt securities and money market instruments with the aim of making regular dividend payments to its unit holders. It does this by identifying mispriced credit opportunities in medium-term securities. Moreover, this mutual fund investment opts to adopt a bottom-up investment strategy which basically entails that it picks fixed-income securities based on an organizations’ individual attributes rather than focusing on particular sectors or broad macro conditions.

Like several other income funds, this mutual fund investment is suitable for investors looking at medium term returns. Furthermore, this fund looks to maximise investors returns who have included this mutual fund as part of their portfolio and maintained the portfolio duration between one year to five years. Having said that, this is the mandate of the fund, and recent history suggests that the fund has maintained portfolio duration for less than four years as well. Additionally, it must also be pointed out that depending on prevailing market conditions & interest rate scenario, the fund mandate even allows it bring down the duration to below one year. This is one of the primary reasons why several veteran investors have chosen to include this fund as part of their portfolio as it has managed to clock in double digit three and five-year returns consistently. This fund has also earned a Morningstar Analyst Rating of Silver.

This fund is managed by renowned stock-picker, Maneesh Dangi who’s been at the helm since its inception. However, in 2013, Mr. Dangi decided to step down as he preferred to stay out of the limelight and instead became the CO-CIO thus handing over fund responsibilities to Rohit Murarka who was part of the research team. However, Mr. Dangi’s immense influence and valued expertise were clearly missed and the change proved to be short-lived as in September 2014, Mr. Dangi was reinstated as the fund manager. Mr. Dangi’s immense influence and valued expertise have clearly rubbed off on the other members of the core team which is demonstrated by the fund’s solid performance in the following years. The team assumes a research-intensive disciplined approach with a clear focus on internal research and ratings. Additionally, at any time the maturity of the portfolio will be governed by the fund manager’s approach to the interest rate scenario prevailing in the economy. Needless to say, the current mutual fund performance continues to remain positive under the stewardship of Maneesh Dangi. From the 1st of April, 2017, this fund is now being co-managed by the dynamic duo of Maneesh Dangi and Ms. Sunaina Da Cunha.

In 2012, the fund underwent a major shake-up in relation to it’s investing stance. Earlier, the fund used to actively look to invest in high-quality AAA and AA+ rated debt securities and invested in non-AAA securities only after strict due diligence of every company while also measuring up the risk-reward ratio. However, the fund currently prefers to take on a shrewd view point by also looking to invest in lower-rated (AA) instruments as well. It must be pointed out that AA rated bonds also tend to provide a high capital safety while offering a higher yield or interest. As a matter of fact, on an average, a considerable proportion of the securities in the fund portfolios of Credit Opportunities Funds are rated AAA and AA. Thus, irrespective of this change, the fund’s well defined and sound investment strategy remains very much on track with the fund’s investment proposition. This has enabled Mr. Dangi to invest a sizeable portion of the portfolio in government securities which are reflected in its current holdings as of now.

As mentioned before, this fund used to predominantly function as a Credit Opportunities Funds which basically meant that it looked to generate returns by identifying mispriced credit opportunities while also counting on a narrowing of the yield gap. In March 2017, the fund made an announcement that it would be taking up an exposure to the tune of up to 10 per cent into alternative instruments such as REIT’s (Real Estate Investment Trusts) and InvIT’s (Infrastructure Investment Trusts). This was presumably made in relation to the recent budget move which allocated a massive share towards infrastructure development, which, in turn, might give rise to several new opportunities in the country’s real estate and infrastructure segments. This move has further led to the fund has now been classified as a moderate risk by the AMC. Although this move can be called as a bold step, investors shouldn’t be worried as the fund’s impeccable track record of top-notch risk management along with due diligence in the past should calm fraying nerves. Furthermore, this move also paves the way for investors to explore new investment avenues in a bid to generate inflation-beating returns for their portfolio.

As of June 2017, this scheme is currently ranked number three in the Credit Opportunities Funds category by CRISIL which is up from the fifth position from last quarter. If you are looking for the best performing mutual funds and wondering where to invest money for short and medium investment needs in the next two years to five years, you can approach our financial advisors for customised investment plans.