Aditya Birla Sun Life PSU Equity Fund is an open-ended equity scheme that primarily invests in Public Sector Undertakings (PSUs) to achieve long-term capital appreciation. Launched on December 30, 2019, the fund falls under the thematic equity category, focusing on the PSU theme. As of January 31, 2025, the fund’s Assets Under Management (AUM) stood at ₹5,168.64 crores, indicating a substantial investment base. The fund is classified under the ‘High’ risk level, reflecting its significant exposure to equity markets and the inherent volatility associated with PSUs.
Over the past year, the fund has delivered a return of -13.25%, underperforming its benchmark, the BSE PSU TRI. However, over a three-year period, the fund has achieved a Compound Annual Growth Rate (CAGR) of approximately 28.6%, showcasing its potential for substantial returns over the long term. Since its inception, the fund has provided an average annual return of 23.40%, effectively doubling the invested capital every three years.
The expense ratio for the direct plan of the fund is 0.55%, which is competitive compared to other thematic equity funds. Investors should note that an exit load of 1.00% applies if units are redeemed or switched out within 30 days from the date of allotment; beyond this period, no exit load is charged.
The fund’s portfolio is diversified across various sectors, with significant allocations in Financial Services (34.09%), Utilities (26.81%), and Energy (18.56%). As of January 31, 2025, the top holdings include:
- State Bank of India: 12.03%
- NTPC Ltd.: 8.05%
- Power Grid Corporation of India Ltd.: 7.76%
- Oil and Natural Gas Corporation Ltd.: 6.74%
- GAIL (India) Ltd.: 4.94%
The fund is co-managed by Mr. Dhaval Gala and Mr. Dhaval Joshi. Mr. Gala, who has been managing the fund since September 22, 2022, holds a BMS from Mithibai College and a PGDBM in Finance from N.L. Dalmia Institute of Management Studies & Research. His prior experience includes roles at B&K Securities and J.P. Morgan Chase India Private Ltd. Mr. Joshi joined as a co-manager on November 21, 2022.
The fund adopts a thematic investment approach, focusing on equity and equity-related instruments of PSUs. This strategy aligns with investors seeking exposure to government-owned enterprises, which may offer unique growth opportunities and stability. The fund’s investment style is characterized by a thematic equity focus, targeting long-term capital appreciation through investments in PSUs.
As of February 28, 2025, the Net Asset Value (NAV) of the direct plan’s growth option is ₹29.65. Investors can start investing with a minimum lump sum amount of ₹500 and can initiate a Systematic Investment Plan (SIP) with as little as ₹100, making it accessible for a wide range of investors.
Investing in Aditya Birla Sun Life PSU Equity Fund offers exposure to India’s public sector enterprises, which play a pivotal role in the country’s economic development. The fund’s diversified portfolio across key sectors like financial services, utilities, and energy provides potential for long-term capital appreciation. Additionally, the competitive expense ratio enhances the fund’s appeal to cost-conscious investors.
However, potential investors should consider the inherent risks associated with thematic investments, particularly those concentrated in PSUs. The fund’s high-risk classification indicates significant volatility, and its recent underperformance over the past year underscores the need for a long-term investment horizon and a tolerance for short-term fluctuations.
The top companies in the fund’s portfolio, such as State Bank of India, NTPC Ltd., and Power Grid Corporation of India Ltd., have shown resilience and growth potential. These enterprises are integral to India’s infrastructure and energy sectors, offering prospects for steady returns. However, investors should remain cognizant of sector-specific risks and the impact of government policies on these entities.
In conclusion, Aditya Birla Sun Life PSU Equity Fund presents an opportunity for investors seeking targeted exposure to India’s public sector enterprises. While the fund has demonstrated strong long-term performance, its thematic focus and associated risks necessitate careful consideration and alignment with individual investment goals and risk tolerance.
