Glennor - Since 1979

BALANCED FUNDS COMPARISON OVER 5 YEARS RETURN

These funds work when markets are choppy or steady, and suit both seasoned as well as newbie conservative to moderately aggressive investors

Balanced funds have been around for some time now, but investors have recently warmed up to them. Data from ValueResearchOnline show that investors pumped in Rs 28,484 crore into balanced funds in FY16, compared to Rs 15,417 crore in FY15, a whopping 84 per cent increase. And, given that its popularity is waxing, this category is only likely to balloon in coming years. Says Naren, “Largely, the increase in assets of balanced funds is on account of incremental allocation by investors who have been underweight on equity asset class over the past few years. There have been bouts of volatility from the beginning of the year, due to which we have been recommending our investors to invest in balanced advantage funds to benefit from volatility.” In fact, investors have a number of balanced funds to choose from. Equity-oriented balanced funds are those that have a higher equity component, while debt-oriented balanced funds have a higher debt component. So, if an equity-oriented balanced fund invests 65 per cent in equity, a debt-oriented balanced fund would invest 65 per cent of its portfolio in debt.

While an equity-oriented balanced fund suits a moderate to aggressive risk-taker, a debt-oriented balanced fund suits a highly conservative investor because of the low equity component. Dedhia reckons that investors could invest without much fuss in equity-oriented balanced funds if s/he has a higher risk appetite.


For investors, as balanced funds combine both debt and equity in a single investment structure, it leaves the hassle of asset allocation to the fund manager. If investors try to balance their asset allocation through separate funds or individual strategies, they may have to pay short-term capital gains tax or a higher exit load, and so on. Says Dedhia: “There is a continuous process of buying low and selling high, and if investors want to do this regularly on their own, taxes can kick in.” But balanced funds offer switching benefits without these additional levies. Besides, the risk-adjusted return can be better than in equity funds in some balanced funds because of the steady debt component of the portfolio. The debt component helps iron out equity volatility, and keeps steadies a portfolio when too much choppiness prevails. Data from ValueResearchOnline show that this category has given returns of 15.2 per cent in the last three-year period. Besides, when markets have been around the same levels in the last one-year period, these funds have given returns of around 1.44 per cent. So, this shows that they preserve gains when markets are falling, and the equity component gives the kicker to returns when markets rise.

Investors have to come into the market with a long-term outlook. Balanced funds require at least three to five years for a cycle to be complete. But, if you want to take a moderate risk and make investment planning and asset allocation a lot easier, then balanced funds should be your route.


The Benefits Of Balanced Funds
Balanced funds invest in both equity and debt and, therefore, their preset asset allocation works for the moderately aggressive investor

The debt component in these funds helps stabilise the portfolio which, in turn, reduces volatility in the fund

Balanced funds automatically rebalance to pre-determined ratios, hence they help stay ahead of the market conditions

When equities go up, balanced funds help book profits out of equities and vice versa due to rebalancing

Dynamic balanced funds follow a more conservative approach to equity exposure by investing in equity according to its valuations

Balanced funds are taxed as equity funds, hence investors get the benefit of long-term capital gains if held for over a year

There are various types of balanced funds; some come with an aggressive equity exposure, while others have lower equity exposures 

Investors could choose between different balanced funds according to their risk evaluation and how much equity exposure they want

* Balanced funds work better when equity markets are volatile or flat, but investors need to maintain a three-year investment horizon

Scheme

HDFC Balanced Fund (G)

Tata Balanced Fund - Regular (G)

DSP-BR Balanced Fund (G)

HDFC Prudence Fund (G)

ICICI Pru Balanced Fund (G)

Fund Class

Balanced

Balanced

Balanced

Balanced

Balanced

Fund Type

Open-Ended

Open-Ended

Open-Ended

Open-Ended

Open-Ended

Scheme Asset 
Rs in cr

8,040.62
Mar-31-2017

6,029.84
Mar-31-2017

2,676.89
Mar-31-2017

16,351.80
Mar-31-2017

6,323.74
Mar-31-2017

Inception Date

Sep 11, 2000

Oct 08, 1995

May 15, 1999

Dec 16, 1993

Oct 07, 1999

AMC/Fund 
Family

HDFC Asset Management Co. Ltd.

Tata Asset Management Limited

DSP BlackRock Investment Managers Limited

HDFC Asset Management Co. Ltd.

ICICI Prudential Asset Mgmt.Co. Ltd

AMC Asset 
Rs in cr

237,177.61
Mar-31-2017

42,619.16
Mar-31-2017

64,176.79
Mar-31-2017

237,177.61
Mar-31-2017

242,961.31
Mar-31-2017

Performance Returns as on May 19, 17

* Returns over 1 year are Annualised

3 Months

7.0%

5.0%

7.5%

8.6%

5.0%

6 Months

12.9%

10.6%

14.1%

14.2%

13.6%

1 Year

24.9%

17.0%

25.7%

32.2%

28.1%

2 Years

12.1%

7.6%

13.4%

12.9%

13.1%

3 Years

18.4%

17.3%

19.1%

15.8%

17.7%

5 Years

19.3%

18.9%

17.1%

18.4%

20.2%

>Detailed Performance

>Detailed Performance

>Detailed Performance

>Detailed Performance

>Detailed Performance

Portfolio

Top 5 holdings

HDFC Bank, Reliance, Larsen, ICICI Bank, SBI

HDFC Bank, ICICI Bank, ITC, Power Grid Corp, Reliance

HDFC Bank, ITC, SBI, ICICI Bank, Larsen

SBI, Larsen, ICICI Bank, Infosys, Reliance

ICICI Bank, Bharti Airtel, Tata Chemicals, Tata Motors, Power Grid Corp

Weightage to
top 5 holdings

17.78%

16.88%

16.11%

27.97%

20.29%

Top 3 Sectors

Banking/Finance, Engineering, Oil & Gas

Banking/Finance, Pharmaceuticals, Automotive

Banking/Finance, Cement, Oil & Gas

Banking/Finance, Engineering, Technology

Banking/Finance, Utilities, Technology

Weightage to 
top 3 sectors

31.94%

33.9%

37.39%

41.86%

26.93%

>Full Portfolio

>Full Portfolio

>Full Portfolio

>Full Portfolio

>Full Portfolio

Management & Fees

Fund Manager

Chirag Setalvad

Pradeep Gokhale / Gopal Agrawal

Atul Bhole / Vikram Chopra / Pankaj Sharma

Prashant Jain

S Naren, Atul Patel and Manish Banthia

Entry Load

0%

0%

0%

0%

0%

Exit Load

1.00%

1.00%

1.00%

1.00%

1.00%

Load comment

Exit Load 1% if units are redeemed / switched-out within 18 months from the date of allotment.

Exit load - 1% if redeemed/switched out on or before expiry of 365 days from the date of allotment.

If the units redeemed or switched out are upto 10% of the units purchased or switched in within 12 months from the date of allotment: Nil. If units redeemed or switched out are in excess of the limit within 12 months from the date of allotment: 1%. If units redeemed or switched out on or after 12 months from the date of allotment: Nil

Exit Load 1% if units are redeemed / switched-out within 1 year from the date of allotment.

Exit Load 1% if units are redeemed / switched-out within 1 year from the date of allotment. the exit load will be Nil.