Aditya Birla Sun Life India GenNext Fund is celebrating its anniversary today, having been launched on 5th August 2005. Since its inception, this sectoral/thematic scheme has delivered a decent return of over 17%. In this article, we will delve into the details of this fund, its investment philosophy, portfolio allocation, historical performance, and more.

Understanding the Fund’s Objective

The primary goal of the Aditya Birla Sun Life India GenNext Fund is to generate wealth by investing in equity/equity-related instruments of companies that are poised to benefit from the rising consumption patterns in India. With the increasing availability of disposable income in the hands of the young generation (GenNext), there has been a significant surge in consumption trends over the last two decades. This rise in consumption patterns has been driven by high disposable incomes and the growing awareness and aspirations of the youth.

Investment Strategy

To capitalize on the booming consumption trends in India, the fund focuses on companies engaged in manufacturing products or providing services that align with the requirements and aspirations of the younger generation. It emphasizes products and services that have strong brand identities, offering consumers a wide array of choices.

The fund adopts a growth-oriented investment philosophy, seeking out secular growth stories and consistent compounders. It invests in superior-quality stocks with sustained growth visibility. Additionally, the fund displays flexibility in investing across market capitalization, while also being cautious about avoiding high beta sectors.

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Portfolio Composition

According to the fund’s recent factsheet, a significant portion of its portfolio (16.26%) is invested in stocks of banks, followed by diversified FMCG (10.42%), Automobiles (8.62%), Consumer Durables (7.73%), Retailing (7.01%), Finance (6.2%), Personal Products (5.89%), Beverages (4.74%), Food Products (4.35%), Telecom (3.41%), Pharmaceuticals and Biotechnology (3.38%), and Leisure Services (2.94%).

The top 10 stocks in which the fund has allocated a larger percentage of its portfolio include ITC (6.88%), ICICI Bank (5.43%), HDFC Bank (3.62%), Hindustan Unilever (3.54%), Airtel (3.41%), Axis Bank (2.97%), Maruti Suzuki (2.37%), United Spirits (2.37%), Nestle India (2.08%), and Tata Motors (1.99%).

Performance Analysis

The Aditya Birla Sun Life India GenNext Fund has been rated 3 Stars by Value Research. It tracks the NIFTY India Consumption Total Return Index. Here are the annualized returns for different durations as of the latest data available.

• 10-year returns: 19.28% (direct plan) and 18% (regular plan)
• 5-year returns: 15.31% (direct plan) and 13.99% (regular plan)
• 3-year returns: 25.79% (direct plan) and 24.33% (regular plan)
• 1-year returns: 15.35% (direct plan) and 14% (regular plan)
• Since launch: 17.52% (regular plan)

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Expense Ratio and Other Charges

The Total Expense Ratio (TER) for the fund’s regular plan is 1.92%, while the direct plan charges 0.86% (inclusive of additional expenses and goods and services tax on management fees). There is no entry load, but there is an exit load of 1% of applicable NAV for redemption or switch-out of units within 30 days from the date of allotment.

Fund Size and NAV

The current Assets Under Management (AUM) of the Aditya Birla Sun Life India GenNext Fund stands at Rs 3965.23 crore. The current NAV for the direct plan is 159.5600, and for the regular plan, it is 178.6900.

Investment Suitability

Due to its consumption-focused theme, the fund tends to avoid high volatility sectors, making it an attractive investment option for first-time investors. The Aditya Birla Sun Life India GenNext Fund aims to leverage various socio-economic trends to drive value enhancement in consumption across sectors. Its strategy of being sector and market cap agnostic further enhances its potential to select the best businesses across the spectrum.

While the Aditya Birla Sun Life India GenNext Fund has delivered commendable returns since its launch, investors should exercise caution. There are no guarantees that past performance will be replicated in the future. As the sectoral/thematic category of equity mutual funds is filled with several schemes, investors should carefully consider their financial goals, risk appetite, and risk capacity before making any investment decisions.