Seeking relatively safer bets in the current volatile market while not losing out on potential upsides? Equity-oriented balanced funds may be just you need. Canara Robeco Balance Fund is a good choice here.

The fund, which invests nearly 75 per cent in equity, mostly large-caps, and the rest in debt instruments of the safe kind, has earned its stripes. It ranks in the top quartiles among peers across time periods. Over the bull market of the past two years, Canara Robeco Balance has outperformed the the category average by a wide double-digit percentage point gap.

It has also been adept at containing downsides — during the low of 2011 for instance, the fund lost much less (4 percentage points) than the category average. The record soured somewhat during the downturn of 2013, but the fund has pulled up its socks. It’s gained in the volatile market since January this year in contrast with the fall in the category average.

The good performance of Canara Robeco Balance across market cycles is attributable to its bias towards safety and stability.

This is reflected in the significant proportion of large-cap stocks in its portfolio. Currently, large-cap stocks (market cap exceeding ₹10,000 crore) account for more than 40 per cent of the portfolio.

This is not to say that the fund does not take risks for better returns; the share of small and mid-caps in its portfolio has risen from about 20 per cent last August to 33 per cent currently. Yet, Canara Robeco has held its ground even in a volatile market. Multi-baggers such as Force Motors and Eveready Industries aided returns last year, as did adding on large-cap stocks such as Axis Bank and Lupin. The fund also did well to exit quickly from losers such as Hathway Cable & Datacom. . On its debt investments which have accounted for a quarter of the portfolio, Canara Robeco plays it safe.

The chunk is generally in corporate debentures rated AA or above, for instance, Power Grid, Tata Sons and REC.

Current portfolio Last month, the fund shifted a big portion to government securities, which now form more than half the debt portfolio.

This could lead to capital gains, as rates move south. The fund has also completely kept away from stocks of public sector banks which face asset quality trouble.

Mid-cap picks such as VA Tech Wabag and Gulf Oil Lubricants that trade at reasonable valuations should help.

Related Topics
comment COMMENT NOW