Comments
Investors can buy the units of UTI Balanced in the light of its stable performance over the years. With relatively low risk profile, the fund has been able to deliver reasonable returns.
Over one-, three- and five-year periods, UTI Balanced has outperformed its benchmark – Crisil Balanced Fund Index. The level of outperformance is not spectacular, though.
In the last five years, the fund has delivered compounded annual returns of 3.7 per cent, which places it in the mid-quartile of schemes in the category.
It has delivered higher returns compared with funds such as SBI Magnum Balanced and Sundaram Balanced over this period.
The fund focuses on large-cap stocks in its equity portfolio and sticks to safe bets in its debt portion.
This makes UTI Balanced’s overall portfolio a relatively safe bet, though not necessarily suited to deliver superlative returns.
The fund is suitable for investors as a diversifier, if other top options have been exhausted. Small amounts can be invested regularly through the SIP (systematic investment plan) route for relatively longer periods of time for reasonable returns.
Portfolio and strategy
UTI Balanced has always favoured large-cap stocks (greater than Rs 7,500 crore market capitalisation) in its portfolio. Such stocks account for more than 60 per cent of the portfolio, while mid-caps have found representation to the tune of 12-15 per cent. This mix gives the fund relatively higher safety, though it may at times deny opportunities to gain from spectacular rallies that mid-caps witness during broader market upswings.
In terms of sectors held, the fund’s top exposure has been in segments such as banks, consumer non-durables, pharma and software. Most of these segments have rallied quite well from early 2009 and have served the fund well.
The fund trimmed exposure to underperforming sectors such as capital goods and power from 2010 which, in hindsight, has been an appropriate move.
Though the portfolio has a certain defensive touch to it, the uncertain local and global economic macro-environment means that such sectors may still be favoured for the foreseeable future.
The fund, which has consistently held stocks such as HDFC, Tata Global Beverages, MRF, L&T and Federal Bank, has benefited from the splendid ride-up that these stocks have enjoyed over the past year.
UTI Balanced plays it safe with reference to its debt portfolio. The fund invests mostly in AAA or AA+ rated instruments which promise a fair degree of stability.
These investments include NCDs (non convertible debentures) of companies such as PFC, Shriram Transport Finance, Sundaram Finance, LIC Housing Finance, Tata Sons and BMW India.
Overall, it is an average return generating fund for low-risk appetite investors.
The NAV per unit of the growth option is Rs 87.36
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.