Balanced funds can offer dual advantage of growth and safety in volatile times, observed Vinit Sambre, Vice-President and Fund Manager, DSP BlackRock.

Conceding that the markets had run up quite a bit after the Lok Sabha election results last year and valuations brought down to more reasonable levels in recent times on the back of global issues and disappointments on the reforms front, he said “we are watching the various initiatives being taken by the government on the policy and reforms front as we believe that this is going to be the single most important factor for our markets.

“Corporate earnings have not picked up. However, with a likely improvement in the overall economy, demand is expected to pick up and this would in turn drive earnings. In the present scenario where equity markets have exhibited quite a bit of volatility, balanced funds have emerged an attractive investment option both in terms of returns along with the safety of debt,” DSP BlackRock Fund Manager said.

Reverting to the performance of the company’s Balanced Fund, Sambre said that the fund had staged a smart turnaround over the past year. “There is a good balance of the portfolio mix with equity at about 70 per cent, while debt and cash comprised the balance.”

Currently, the market is trading at the long term average multiple on a one year forward earnings basis and hence not expensive. Given the expected pick up in the reforms and GDP growth coupled with falling interest rate, we remain positive on sectors like private sector banks, automobiles, consumer durables, oil marketing companies and capital goods sector, he said.

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