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Suresh Parthasarathy

Research Bureau Unit-linked insurance plan (ULIP) balanced schemes have not done too well in the one-year period.

Policyholders of balanced ULIPs averaged a return of 27.5 per cent for a year. The disparity between the best in the category and the worst was wide.

Over one year Birla Sun Life Individual Life Creator’s NAV has grown by 58.6 per cent, while Aviva Unit Linked Protector Fund clocked just 8.7 per cent. Of 145 ULIP balanced schemes, 130 trailed the Crisil Debt Hybrid (60:40), which generated 40 per cent return over a one-year period. Crisil Debt Hybrid indicex was considered for comparison because it is closer to the composition of balanced ULIP schemes. Over, three- and five-year periods, category average returns stood at 10.7 per cent and 14.5 per cent respectively.

But the numbers appear to be encouraging for a six-month period. Of the 145 ULIPs, 90 generated absolute return of 16 per cent and outpaced the benchmark Crisil Debt Hybrid.

ULIP balanced schemes are allowed to invest 50 per cent of assets in equity, but the benchmark has a lower exposure. With increasing yield of government securities and falling bond prices, the performance of debt schemes has suffered in the last six months.

For this analysis we have restricted ourselves to plans that have a mandate to invest a maximum of 50 per cent in equity investments. One interesting finding is that insurance companies offered more balanced funds than growth plans (where 100 per cent of premium, after deducting the charges, are allowed to be invested in equity) in recent times.

Across all insurers there are 62 plans that have a mandate to invest 100 per cent of premium in equity, whereas 145 plans are under balanced funds.

More Stories on : Mutual Funds | Credit Rating | Life Insurance

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