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Monday, October 6, 2014

BNP Paribas Long Term Equity Fund - Invest Online - ELSS Fund

 

BNP Paribas Long Term Equity Fund - Buy Online

 

The scheme aims to generate long-term capital growth from a diversified and actively managed portfolio of equity and equity related securities along with income tax rebate, as may be prevalent from time to time.

 

This fund's track record has been a tale of two halves. From its inception in 2006 until 2010, the fund put up an erratic performance. It fell behind the benchmark as well as category in this period. But since 2011, after Shreyas Devalker started managing this fund, it has pulled up its socks and delivered consistent out performance. The recent Value Research rating of 4-5 stars, are a marked improvement from the average 2 star rating since inception.

The fund doesn't go overboard with mid- or small-cap exposures though these stocks do feature regularly in the portfolio. As a rule, this fund has retained a two-thirds allocation to large-cap stocks and a one-third exposure in mid- and small-caps in the recent years. This makes it slightly overweight on larger stocks relative to its category, while it typically owns less mid-caps than its peers.

The fund's asset size has remained quite small since inception, shrinking from nearly R200 crore in end 2007 to sub-R50 crore in early 2011, thereafter gradually ramping up in size, back to R235 crore by end June 2014. The compact size notwithstanding, the portfolio features rather a large number of stocks-over 50 at last count. With the fund betting less than 4 per cent of its assets on its top ten holdings, the portfolio is quite diversified. A fair number of calls have to work for this fund to outperform its peers.

Nevertheless, BNP Paribas Long Term Equity Fund has managed to convincingly beat peers and the benchmark in the last three years. The three year return of 18 per cent beats the index return of 11 per cent quite substantially. The fund's early calls to move into cyclical stocks-not from the financial space, but from sectors such as construction, engineering and services have worked in its favour in the last one year. Churn in the portfolio has been higher than is usual for tax saving funds at over 70 per cent.

Given that tax saving funds carry a lock-in period, a sustained period of out performance would be essential to recommend fresh investments in this fund, with conviction.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

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