Fund pick: Tata Balanced Fund

Launched in October 1995, Tata Balanced Fund is categorised under the balanced category of CRISIL Mutual Fund Ranking. It has been consistently ranked in the top 30 percentile (CRISIL Mutual Fund Rank 1 and 2) for the past seven quarters (ie since June 2014).

The fund’s primary objective is to facilitate income distribution and/or medium- to long-term capital gains, while emphasising importance of capital appreciation at all times. The fund had quarterly average assets under management of Rs 5,010.49 crore as on December 31, 2015, and is being managed by Atul Bhole (since January 2012) and Akhil Mittal (since July 2015).

The fund has outperformed its benchmark (the CRISIL Balanced Fund Index) and category (represented by balanced funds under CRISIL Mutual Fund Ranking, as of December 2015), across most timeframes. Despite slack performance caused by the global economic slowdown over the past year, it has managed to deliver favourable returns over the longer term– two, three, five, seven and 10 years.

After the sub-prime crisis, the fund has beaten its benchmark and category across most market phases. The fund delivered peak returns (48.61 per cent annualised) in the phase after the sub-prime crisis (April 2009 to December 2010), vis-à-vis its benchmark (33.26 per cent) and the category (46.11 per cent), respectively.

An investment of Rs 1,000 on March 31, 2002 would have appreciated to Rs 11,857 (annualised return of 19.36 per cent), as on March 17, 2016. Similar investments in the category and benchmark would have grown to around Rs 9,857 (17.79 per cent) and Rs 4,968 (12.16 per cent), respectively.

A monthly investment of Rs 1,000 over last 10 years (principal of Rs 1.20 lakh) via a systematic investment plan (SIP) would have grown to Rs 2.56 lakh by March 17, 2016, offering 14.61 per cent annualised returns. A similar investment in the benchmark would have grown to Rs 1.83 lakh (8.24 per cent annualised).

Portfolio analysis

On an average, over past three years (ending February 2016), the fund maintained a high exposure of 73.83 per cent to equity and 23.27 per cent to debt. This compares with an average of 70.71 per cent exposure to equity and 21.24 per cent to debt for the category.

The top five sectors constituted 41.45 per cent of the fund’s equity portfolio on an average in the last three years ended February 2016. The average highest allocation was to banks (11.53 per cent), followed by software (9.93 per cent), pharmaceuticals (6.83 per cent), consumer non-durables (6.47 per cent), and finance (5.58 per cent) for the same period.

The fund has held 10 stocks consistently over last 36 months, with average exposure at 19.20 per cent. Of these stocks, the highest exposure was to HDFC Bank (3.56 per cent), followed by HCL Technologies (3.41 per cent) and Shree Cement (2.11 per cent).

An average 95 per cent of the debt portfolio was held in sovereign and highest-rated (AAA / P1+) securities, vis-a-vis the category average of 84.21 per cent. This indicates that the debt portfolio is comparatively conservative, with very good quality debt.