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| Prudential ICICI Balanced prefers not to take an aggressive stance on either of the two asset classes
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| Background: Prudential ICICI Balanced Fund was launched in October 1999. Entry into the fund requires a minimum investment of Rs 5000 and is subject to a 2 per cent entry load.
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| Performance: Like most funds that were launched when the tech boom was about to burst, Prudential ICICI Balanced had a tough time in its first year.
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| But the fund was quick to return to the script of conservatism and measured risk that a balanced fund should be following at all times.
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| From the bottom quartile in 2000, it has gradually inched its way into the top league of balanced funds. This can be seen from its 52.85 per cent returns in the last one year.
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| Portfolio: After the technology excesses of 2000, when it swung from 68 per cent gains in five months to a 45 per cent loss by the end of 2000, the fund has spread its assets evenly among different sectors and has limited technology exposure to a handful of large-caps.
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| Thus in the tech-led bull phases such as post 9/11, the fund may have lagged behind its more aggressive peers, but the cautious approach paid off in the tech-led downfall of March 2001.
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| The rest of its equity portfolio has always been well diversified across old economy sectors. The fund did participate in various sector-specific stories that have happened in the last couple of years but in a limited way.
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| For instance, while its peers were loaded with energy stocks in the first half of 2002, Prudential ICICI Balanced kept a relatively low exposure. But its sector plays in banking, engineering and pharma have boosted its returns.
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| In recent times, the fund has reduced allocation to banking and auto sectors while beefing up energy stocks like IOC and ONGC.
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| On the debt side, as interest rates marched south since late 2000, the fund increased its debt allocation which helped it keep its head above ground in early 2001.
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| While the average debt allocation came down in 2002, it is up again this year. Within debt, top-rated corporate bonds have usually dominated the portfolio.
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| The fund made marginal allocations to gilts till 2001, stayed away in 2002 and has actively sought them in 2003 so far. As against a 70 per cent equity exposure in its early days, the fund now tends to cap it at 65 per cent.
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| Outlook: Prudential ICICI Balanced doesn't take an aggressive stance on either of the two asset classes, and conservative investors will find this fund's style to their liking. |
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