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Launched on October 8, 1995, Tata Balanced Mutual Fund is an equity-oriented hybrid fund, with an aim to provide investors the best of equity and debt markets. The fund has been ranked in the top 30 percentile (CRISIL Mutual Fund Rank 1 and 2) of the balanced category of the CRISIL Mutual Fund Ranking in the past eight quarters. It has quarterly average assets under management (AUM) of Rs 2,236 crore as of quarter ended March 2015. The fund is managed by Atul Bhole (equity portfolio) and Raghupati Acharya (debt portfolio).
Investment objective
The fund intends to provide income distribution through long-term capital gains, while emphasising the importance of capital appreciation. It aims at investing 65-75 per cent in equity and equity-related instruments and the remaining in debt and money market instruments.
Performance
The fund has outperformed its benchmark (CRISIL Balance Fund Index) and the category across various time frames (Category average represents simple average of all funds within the balanced category as defined by the CRISIL Mutual Fund Ranking). Rs 10,000 invested in the fund since April 1, 2002 (Inception date of CRISIL Balance Fund Index -March 31, 2002) would have grown to around Rs 1,26,441 (at a compound annual growth rate or CAGR of 21.29 per cent) as on May 21.
A similar investment in the category and the benchmark would have grown to Rs 94,692 and Rs 52,141 at a CAGR of 18.69 per cent and 13.39 per cent, respectively. A monthly investment of Rs 1,000 under systematic investment plan (SIP) over 10 years would have grown to Rs 3,13,610 at the rate of 18.35 per cent per annum. A similar investment in the benchmark would have grown to Rs 2,10,603 at the rate of 10.89 per cent per annum. The fund has also outperformed the category on a risk-adjusted, over three years, as indicated by higher Sharpe ratio of 2.11 vis-a-visthe category’s 1.79.
Portfolio analysis
The fund has maintained high exposure to equities (three-year average of 74.16 per cent); the lowest exposure was 71.55 per cent. Within equities, the fund has maintained an average exposure of 62.52 per cent to CRISIL defined large-cap stocks (The top 100 stocks on the National Stock Exchange are defined as large-cap stocks by CRISIL) and the balance to small- and mid-cap stocks.
The fund is more diversified than the category, both at the sector and stock levels. The top five equity holdings of the fund form 27.55 per cent of the fund vis-à-vis the category’s 34 per cent. At the sector level, the top five equity sectors form 59.45 per cent of the fund against the category’s 62 per cent.
Higher exposure to finance, cement and pharmaceuticals; and lower exposure to non-ferrous metals, minerals and mining, power and petroleum products have helped the fund outperform its benchmark over the past three years. While the CNX Nifty returned 20.28 per cent over this period, CNX Finance, S&P BSE Capital Goods and CNX Pharma Index returned 25.57 per cent, 23.78 per cent and 36.24 per cent, respectively. During the same period, CNX Metal, S&P BSE Power and S&P BSE Oil and Gas under performed the CNX Nifty by returning -3.17 per cent, 4.97 per cent and 8.37 per cent, respectively.
Consistent exposure to high-performing stocks, such as HCL Technologies, Sun Pharmaceutical Industries, HDFC Bank, Lupin and Housing Development Finance Corporation has helped the fund generate superior returns.
On the debt side, the fund has 25.83 per cent exposure to debt securities. Of the total debt exposure, 93.86 per cent is to top-rated long-term and short-term papers and government securities, indicating high portfolio credit quality.
