Investors can buy the units of Canara Robeco Balanced Fund (Canara Balanced), given its steady record over the long-term. Its performance has especially been creditable over the past three years. Over one-, three- and five-year time-frames, the fund has managed to exceed the returns of its benchmark, Crisil Balanced.
Over a five-year period, Canara Balanced recorded a compounded annual return of 12.2 per cent, that places it among the mid-quartile of balanced funds. But over the last three years, the fund has moved into the top quartile of funds in its category. During this period, Canara Balanced has outperformed funds such as UTI Balanced, Sundaram Balanced and FT India Balanced.
The fund may be suitable for investors who have limited penchant for risk.
Portfolio and strategy : Over the past few years, Canara Balanced has managed to anticipate markets well during periods of upswing, while containing downsides reasonably during market corrections. In the rally of 2007 and in the protracted rally of 2009-10, the fund delivered substantial outperformance over Crisil Balanced Index. But in the market correction of 2008-09, as with most equity-oriented balanced funds, Canara Balanced too fell a bit more than its benchmark, though it matched most of its peers.
In the recent correction over the past couple of months, the fund has managed to stem the tide to the extent of its benchmark. Canara Balanced also takes a predominantly large-cap bias in its stock selection, which ensures relatively stable returns and may even be desirable in the current environment where mid-caps are being shunned for lack of earnings visibility.
The fund invests in debt instruments to the tune of 25-35 per cent of the portfolio, which shields it somewhat during market volatility. The choice in this segment too is relatively safe, with investments made predominantly in certificates of deposits and corporate debts of institutions such as HDFC, LIC Housing Finance, IOC and Indian Railway Finance Corporation.
Banks have always figured prominently as the top sector held by the fund. But Canara Balanced has also consistently favoured sectors such as pharma, software and media and entertainment.