Managing swings

FUND PICK: Sundaram Balanced Fund

Background: Sundaram Balanced Fund was launched in May 2000. It has an entry load of 1.5 per cent for investments up to Rs 2 crore and there is no exit load.

The minimum investment is Rs 5,000, with subsequent investment in multiples of Rs 500. It offers both dividend and growth options.

Performance: The fund takes diversification quite seriously. It has a well-spread sector and stock allocation and holds good stocks for the long term. It tries to take lesser risks and protect investors' returns.

As on May 28, 2004, the fund's return since launch stood at 12.67 per cent. Its three-year return was 19.23 per cent compared to the category average of 18.25 per cent. Its one-year return was 43.56 per cent against the average balanced fund's 45.99 per cent.

In 2004 so far, Sundaram Balanced has fallen 8.5 per cent versus the category's decline of 9.95 per cent.

Portfolio: The fund is risk-averse. While it has participated in all the market rallies - be it the tech boom of 2000-01 or the PSU bank rally in 2003 - the extent of its participation is not as high as other funds.

This results in lower gains surely, but its losses are also capped. For example, it was not as loaded with tech stocks in 2001 or banks in 2003 compared to other funds.

By doing this, it limits chances of going overboard on a particular sector.

With its conservative approach, the fund loses less in bear markets. It lost just 4 per cent in 2001 compared to 9 per cent for the entire category. Similarly, in 2003, when the markets were rejuvenating itself from a long tranquillity, the fund delivered results.

 

Top holdings
As on Arril 30, 2004	Value (Cr)	Net assets (%)
Aventis Pharma India	1.07	3.98
Greaves Cotton	0.94	3.52
India Nippon Electricals	0.85	3.19
Hero Honda Motors	0.78	2.9
Asea Brown Boveri Power	0.77	2.87
Vijaya Bank	0.66	2.48
Asahi India Glass	0.62	2.31
SBI	0.58	2.16
Grasim Industries	0.58	2.15
Infosys Technologies	0.57	2.12
Indian Oil	0.55	2.07
Glaxosmithkline Pharma	0.53	1.97
National Aluminium	0.52	1.93
Bhel	0.49	1.84
Larsen & Toubro	0.48	1.78
TOP DEBT HOLDINGS (30/04/2004)
LIC Housing Fin 01/11/2006 9.5%	3.28	12.26
Tata Power 24/01/2006 10.9%	2.13	7.96
National Aluminium 2005 14.5%	0.79	2.95
HLL 2005 9%	0.01	0.05

In April 2004, it had the highest exposure to diversified sector at 7.45 per cent. Its tech holdings were at 2.26 per cent.

Lately, the fund has increased its corpus in equity with mid-caps taking up a major chunk. This has been an important development as mid-caps have been volatile for the past few months.

But so far, its mid-caps have not been a cause of concern as its year-to-date performance is better than the category average.

On the debt front, there has been a qualitative shift in the portfolio from AA-rated bonds to AAA bonds. The exposure has increased to 26 per cent in March 2004 from just 5 per cent in Jan 2004. Gilts have not been a favourite for this fund in most part of its tenure.

Outlook: Risk-averse investors who dislike the swings of stock markets will find the fund a safe place to park their money.