K-Balance is best suited for conservative long term investors
Background: K-Balance has diligently treaded a middle path to be called a decent performer in its category. Launched in November 1999, the fund has only one option and has given a single dividend of 10 per cent till date. Entry into the fund is at a load of 1.75 per cent while exit is at NAV.
Performance: In its brief history, the fund has never been a chart buster, but has consistently delivered the good returns. Its annual rankings has been in the top half of the category. In the recent times the fund has kept pace with its peers.
For instance, the fund is up 4.23 per cent as against category average of 2.97 per cent on year-to-date basis. What's more, in the favorable gilt market and southward equity market in 2001 the fund lost less than its peers owing to its high gilt investment. The fund's conservative stance proved fruitful during the tech meltdown and consequently, it was among the lowest losers among the peers.
Portfolio: K-Balanced has consistently been an equity-oriented fund, with the equity debt allocation ranging in between 55:45. However its has not been rigid about the allocation.
For instance, as equities started looking up in early 2002, the fund reduced its bond stakes from an average 42 per cent in 2001 to around 32 per cent untill July this year. However the month of August saw the bond allocation touch 39 per cent.
The fund's equity portfolio has always been diversified across sectors. Unlike its peers launched around the same time, this fund did capitalise on technology boom of early 2000, but in a limited way. Now the technology stakes have been trimmed in favour of defensive sectors like Pharma and FMCG. Plus, the fund has mostly stayed away from the roaring auto and energy stocks.
However what has been more striking is its current mid-cap orientation. As compared to 70 per cent in large-caps and 25 per cent in mid-caps in January this year, the proportion has changed to 53 per cent and 37 per cent respectively. Its bond portfolio was initially overweight in corporate bonds, but the soft interest rates in 2001, forced the fund to shift its gear to government securities.
Currently the debt portfolio is a mix of government securities and top rated corporate bonds.Overall the fund's bond portfolio has generally been a good performer, while the small and mid-cap stocks that round out the portfolio have contributed reasonably both in terms of diversification as well as return.
Outloook: The management's even-handed approach and relative performance of its picks makes this fund a worthwhile choice for conservative long-term investor.
