Aditya Birla Sun Life Balanced ’95 : A safe choice for the risk-averse - Buy

If you are wary of taking full exposure to equities, Aditya Birla Sun Life Balanced ‘95 is a good option to consider. With top-notch performance and diversified bets, it is poised to tide over the volatility in the stock market. After an average performance in 2015, the fund has bounced back to top-quartile performance in 2016 and 2017.

In the last one year, it gave annualised return of 14.1 per cent against category return of 12.6 per cent. Over the last three years, its annualised return of 14.9 per cent was higher than 12.4 per cent for the category. Its top-quartile returns over three years have kept it ahead of peers — namely HDFC Balanced (14.7 per cent), ICICI Prudential Balanced (14.1 per cent) and SBI Magnum Balanced (14.5 per cent) while slightly trailing that of L&T Prudence (15.0 per cent). Over the last one year, the proportion of equity has remained in the 66-75 per cent range. As of September 30, 2017, the fund had about 71 per cent of its portfolio in equities with the rest in debt-based instruments.

The fund generally has a multi-cap orientation and currently has a large-cap bias. Early this year, it changed its mandate, to allow its fund manager to invest up to 10 per cent of the portfolio in units of Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvIT). Ever since, it has made use of the opportunity and currently owns IRB InvIT in its portfolio.

The fund has a well-diversified portfolio comprising 88 stocks. HDFC Bank, IndusInd Bank, Bajaj Finance, YES Bank and Maruti Suzuki were top return givers in the last one year for the fund. In contrast, Tata Motors, Infosys and Aurobindo Pharma were the laggards. In the last one year, it got into the counters of Hindalco Industries, L&T Finance Holdings, Eris Lifesciences and Vedanta while exiting Reliance Industries, Glenmark Pharma and Axis Bank. As of September 30, 2017, HDFC Bank, ICICI Bank, Infosys, Eicher Motors and YES Bank were its top five stocks. The fund is relatively overweight on financials, healthcare and consumer durables as compared to its peers, while remaining underweight on construction and engineering. It is betting on cyclicals, with very high exposure to financials and the strategy can pay off if the economic growth gathers momentum.

In view of the limited scope for further sharp reduction in interest rates, the fund manager has kept the maturity levels of its debt portfolio relatively lower.

Currently, the modified duration of its debt portfolio is 5.1 years as against 7.2 years, 12 months back. It is also taking relatively lesser credit risk than its peers. It has an exposure of 12.4 percent of its portfolio into G-secs, 8.3 per cent into AAA-rated bonds and another 1.9 per cent into ‘AA-rated bonds.