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Aditya Birla Sun Life Mid Cap Fund Growth
 
Morningstar's Take
|29/04/2022
by Kavitha Krishnan

People and Process ratings of Average limit the Morningstar Analyst Rating on Aditya Birla Sun Life Mid Cap. Relatively higher expenses and multiple manager changes lead to a rating of Neutral across share classes. The strategy is not without strengths. It is backed by a capable manager, strong team, and a consistent approach. Anil Shah has been managing this fund since May 2020 after the departure of Jayesh Gandhi from the firm. Shah has also been managing their flexi-cap strategy since 2012. We think that he is an extremely capable manager but would like to evaluate his execution and investment style within the mid-cap space over the long term before we build further conviction on the fund.Shah continues to ply a growth-oriented approach that uses a combination of a top-down and bottom-up approach. A top-down approach is used to scout for investment themes and take sector bets and a sentiment overlay is incorporated to steer the portfolio across market conditions. The manager typically relies on relative valuation techniques to pick stocks that he perceives to be reasonably priced. Overall, we think that the fund's mandate allows its manager enough flexibility to play to his strengths.This report has been updated with the correct fund information. We believe that the success of the strategy depends on its execution and think that Shah is a capable manager who has proved his skill on the flexi-cap fund. Although usually mindful of the benchmark, the fund can tend to take significant off-benchmark exposures. The fund reflects the long-term views of Shah, who tends to stay invested over 18-36 months. However, stock positions can increase or decrease at the margin based on valuations.The fund is currently run as a highly diversified portfolio of around 50-70 holdings. Individual stocks didn't exceed 3% of assets under Gandhi, however, we see this changing under Shah's leadership. Though he aims to remain fully invested, cash levels on the fund tend to fluctuate based on market movements. The fund's long-term performance remains mediocre owing to the multiple manager changes that it witnessed in the past. Overall, we think that the fund holds a lot of potential over the long term.

Morningstar Analyst Rating™
Neutral
Portfolio Role
Given its small/mid-cap orientation, the fund can play a supporting role in an investor's portfolio.
Executive Summary
People: The manager's prowess stands out despite his lack of experience with a mid-cap fund.
Parent: A strong stewardship structure and a stable team stand out about this AMC.
Process: A long-term, growth-oriented approach with a focus on valuations.
Performance: The fund's short track record under its current manager restricts our long-term view.