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Birla Income Plus

Dhirendra Kumar

Birla Income Plus is the first open-end medium-term debt fund, launched in 1995. The fund has been consistent with its dividend payouts. While the fund paid a dividend of 16.5 % in financial year 1996, it gave dividends of 15 %, 13 %, 11.5 % and 8.69 % in the next four years, respectively. However, the past two years dividend is net of dividends tax payout at the AMCs end.

Birla Income Plus has posted an annualised return of 13.08 % since launch on a steadily rising asset base of Rs 1885 crore. The growing asset base has added to the stability of the fund. Initially, the fund was lucky with high coupon corporate instruments for its small size. These instruments with a high coupon, boosted returns when interest rate was on a decline. However, the fund lost its edge with asset gain -- rising sharply from Rs 80 crore in 1996 to Rs 500 crore in 1997.

FUND BASICS   Objective    Size (Cr)    NAV: 19/04/2001    Exit Price    Entry Price    Total Return   Income   1885.36   19.66   19.66   19.66   13.08%

Despite its growing size, the fund has largely been invested in AAA rated corporate instruments. The fund has also taken exposure to unrated and AA & below papers, which peaked at 45 % in September 1999. The fund has picked up yield here since AA papers offer higher interest income for a higher degree of risk. However, amid a growing focus on better credit quality, the fund has gradually embarked on realigning the portfolio in favour of top rated bonds. As on March 31, 2001, AAA rated instrument made up for 82.38 % of the corpus, while AA and unrated instruments comprise 17.81 % of the corpus.

    With a steady fall in income from corporate papers, the fund has sought to pep up returns with investments in government securities, which are highly liquid and hence, provide an opportunity for trading profits. The fund has been conservative with maturity and has handled interest risk by realigning the portfolio in line with changing interest rate expectations.

BENCHMARK COMPARISONS (%)      1M    3M    6M    1Yr    3Yr   Fund   0.41   3.16   7.16   10.35   12.24   I-Bex Tot.   0.26   4.62   10.88   11.32   13.70   Obj. Avg.   0.60   3.44   7.54   10.55   12.10

    Birla Income Plus is a large sized fund today with an average performance track-record. The fund has also effeciently managed sizeable inflows and redemption. While its strategy and growing size has landed the fund in the middle of the return ladder, Birla Income is an attractive investment option for its stability and track record.

Top Holdings (31/03/2001)      Value (Cr.)    % of Assets   G O I   380.93   20.20   Citibank   103.26   5.48   I C I C I   99.97   5.30   IDBI   75.57   4.01   Standard Chartered Bank   64.72   3.43   State Bank Of India   56.82   3.01   IR&FC   53.50   2.84   G E Capital Services   51.62   2.74   Sundaram Finance   50.70   2.69   Reliance Industries   43.99   2.33   Power Finance Corp.   43.94   2.33   H D F C Bank   42.48   2.25   Hongkong Bank   38.91   2.06   Sterlite Industries   36.75   1.95   Lakshmi General Finance   28.10   1.49

Source: Value Research

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