Birla SL Manufacturing Equity Fund NFO-Should you invest?

Birla SL Manufacturing Equity Fund-NFOBirla Sun Life Manufacturing Equity Fund NFO-Should you invest?

New Government’s “Make in India” campaign is creating excitement in manufacturing industry. Birla SL Manufacturing Equity Mutual Fund is one unique Mutual Fund NFO, which invests in Manufacturing companies. Such unique scheme is now attracting several investors. This post is based on request from Akshay on Suggest a Topic. How good is Birla Sun Life Manufacturing Equity Mutual NFO? What are its features and what risks you should consider before investing in Birla Sun Life Manufacturing Equity Fund NFO?

Also Read: What are mutual funds and are various types of mutual funds in India?

Features of Birla Sun Life Manufacturing Equity Fund NFO

  • Open ended mutual fund scheme.
  • Opens for subscription on 13-Jan-2015
  • Closes for subscription on 27-Jan-2015. This would reopen for subscription after 5 days after closure date.
  • This fund benchmark is S&P BSE 500 index. This would focus on 240 manufacturing companies listed on S&P BSE 500.
  • It would invest in companies that are engaged in Engineering, Capital Goods, Consumer Goods, Pharma, Automobiles, Textiles, Electronics etc.

Why to invest in this NFO?

  • New Government focusing on Infrastructure, Defence and creation of Smart Cities would enable several opportunities in manufacturing space.
  • New Government focus is on amending some of the reforms like New GST Implementation, Petro Products linking to market price, FDI investing in various sectors etc. would help manufacturing space to get fresh investments. “Make in India” campaign focuses on manufacturing growth which would create millions of job opportunities.
  • Recent times, there is fall in interest rates. This  would help manufacturing segment to run at lesser manufacturing cost.
  • It does not invest in a single sector. It invests in approx 22 sectors, hence there is less risks to invest in such mutual fund scheme.
  • Amit Shah is the Fund Manager for this NFO. Currently he is also managing successful mutual fund schemes like Birla SL Equity fund, Birla SL GenNext, Birla SL Special Situations funds etc.

Who should invest in Birla SL Manufacturing Equity Fund?

  • This is for high risk investors.
  • Suitable for long term investor who has a positive view on manufacturing segment and willing to take risks.
  • One should note that this mutual fund scheme does not invest directly in sectors like banking, Infrastructure, Information Technology (IT) etc., which are also expected to grow faster now. Hence, if you are thinking to invest in such sectors, you can look for other mutual  fund schemes. 

Also read: Growth Vs Dividend Option – Which is better investment option in mutual funds?

Conclusion: Birla SL Manufacturing equity fund scheme is good for those who are willing to take risks and have a positive view on the manufacturing segment in coming years. With new Government bringing new reforms and focusing on manufacturing segment, this would be definitely a good bet. However, like I always say, instead of investing a lump sum in this mutual fund, you should invest through SIP for next 4-5 years to get good returns.

Readers, what is your view on this new Birla SL Manufacturing equity mutual fund scheme? Are you willing to invest in such schemes?

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Birla SL Manufacturing Equity Fund NFO-Should you invest

Suresh KP

19 thoughts on “Birla SL Manufacturing Equity Fund NFO-Should you invest?”

  1. Hello Suresh Sir,
    Happy new year Sir, I’m thinking to start SIP in Kotak select focus fund (G). I want your opinion about this fund.
    And if this is not good fund to invest then give me some options. I can take risk & looking for long term investment. Thanks

  2. Hi Suresh,

    I have a different opinion on this theme.
    Such schemes are just flavor of the season based on which way the wind is flowing. Most of the companies which are in the manufacturing sector and are fundamentally sound would already be a part of any well diversified equity mutual fund’s portfolio.
    So there is no reason why someone should put money in such a specific scheme which focuses solely on manufacturing, isn’t it?
    Also when govt. says it is focusing on “Make in India” theme, they are not saying that they are going to rely only on manufacturing. It is only the media and so-called analysts’ interpretation that Make in India only means manufacturing. What about the Service industry for e.g. logistics? For any manufacturing industry to be successful, it has to be supported by a sound servicing model w/o which there would be no market for the manufactured goods.For e.g. would u buy a washing machine from someone who can’t assure u of sound service? I guess not.
    So all this hype about Make in India is just that – pure hype by marketing folks. For Make in India to succeed, manufactring is only one of the things and not the only thing.
    While there is merit in investing in mutual funds which invest in manufacturing sector, it may not be a wise thing to invest in a mutual fund solely focusing on a single sector.
    Remember 2008 when all and sundry MFs launched schemes focused on Infrastructure sector and a majority of the schemes are still languishing below the face value and some have just about broken even after 6 years. Not much of an encouragement for investing in a single sector.
    So I would strongly advise people not to get swayed by marketing gimmicks of the mutual funds and instead put money in well diversified equity schemes of the same MF house. For e.g. it would make a lot more sense to put money in Birla MF’s Frontline Equity Fund than the Manufacturing fund, which would anyway have a significant portion in the manufacturing sector if the fund manager believes that is where the growth is. It would pay dividends in the long run.

    1. Dinesh, Thanks for your valuable and detailed comment. I agree with some of your points like some of the companies in manufacturing sector have already grown with make in India. for a moment let us put aside media folks hype.  1) Like I indicated, this is not a SINGLE SECTOR. This scheme invests in 22 multiple sectors. Manufacturing could be in FMCG, Pharma, Infra items etc., Hence this is spanning across sectors. Yes, I agree that Infra funds have lagged during 2008, however new govt focus is on Infrastructure which earlier govt was neglecting. This is one of the major hurdle for the growth. 2) My conclusion is that we should invest in SIP to get good returns. Like I always say, don’t invest in 1 or 2 MF schemes. Diversify your portfolio into atleast 5 to 8 schemes so that any downfall in any particular sector or segment or scheme should not screw up your investment. 

  3. I am very much agree with the analysis by Sri Suresh sir. I would like to add that investing through SIP is very good for the salary persons;but for retired persons like me in my opinion Lump sum is good and if desire as per performance of market; they can go for SIP since SIP creation in the existing folio is much easier. Regards

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