Fund of Fortnight

MF Select- This is our mutual fund recommendation. Every fortnight , we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.  

Aditya Birla Sun Life Focused Equity Fund (Growth)



Reason for recommendation

Post the recent union budget presented on July 5, the equity market has fallen relentlessly and broke all its important support levels. The damage was more to small and mid-cap companies. One of the reasons for such fall is overall economic slowdown that we are witnessing currently. In such a situation, it is better to opt for funds that invest in large-cap companies. The reasons being large-cap companies can withstand the slowdown in a far better way compared to small and mid-cap companies. One such fund is Aditya Birla Sun Life Focused Equity Fund, which was earlier categorised as large-cap fund, however, post rationalisation and categorisation of the MF scheme, it has become a focused equity fund. Nonetheless, market-cap bias of the fund will remain towards large-cap stocks and at the end of June 2019, it holds more than 80 per cent of its assets in large-cap companies. Within large-cap companies, it is betting heavily on well-managed financial services companies. Even the other companies where the fund has invested are the largest in their sector and industry. For example, Larsen & Toubro, ITC and Reliance Industries, other companies where the company has major invested are heavyweights of their respective industry. Therefore, even if economic conditions deteriorate from hereon, they will be able to manage more effectively and will be reflected in the fund’s performance. Although, this is a focused fund with only 28 stocks that means higher risk, however, the presence of industry leaders in the portfolio give much solace in these turbulent times. Therefore, this fund is suitable for moderately aggressive investors.