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In a volatile environment characterised by wild market gyrations, investors may be better off putting their money in a blend of debt and equity to contain losses while still being able to participate in any subsequent stock rallies.
FT India Balanced is one such scheme and investors can consider buying its units with a time horizon of around five years.
It is an equity oriented balanced scheme that has done well over the years and has delivered consistently.
Over one-, three- and five-year timeframes, the fund has managed to outperform its benchmark – Crisil Balanced Fund Index. It has been generally a top quartile performer over a longer timeframe of 3-5 years.
It has done better than other schemes such as UTI Balanced, DSPBR Balanced and SBI Magnum Balanced over the past five years. FT India Balanced has managed this despite being a tad conservative when compared with other peers as it invests a higher portion of its portfolio in debt and cash.
The fund takes a value-based approach for its equity portion investments while maintaining safe and highly rated instruments for its debt portfolio.
Portfolio and strategy
Investors with a moderate to low risk appetite will find the fund suitable for generating steady returns. Investments may also be considered through the SIP (systematic investment plan) route to average costs and ride out market volatility.
FT India Balanced invests about 70 per cent of its portfolio in equity and the rest in debt instruments. The proportion of investments made in debt instruments is higher than several peers, who allocate only about 25 per cent in such avenues. As with most equity oriented balanced funds, the scheme invests 20-25 per cent of its portfolio in mid-cap stocks, mostly in quality companies.
The higher allocation to debt has shielded the fund during market falls, but holds it back a bit when the bourses turn bullish. But the fund consistently beats the benchmark and several peers across market cycles.
Banks have been the fund’s favourite sector across market cycles. The other sectors are shuffled mostly based on valuations and, at times, momentum as well. So the fund never went overboard with sectors such as consumer non-durables. It has churned and varied its investments in software, pharma and telecom, auto and cement as well, which have been key segments for the scheme.
With respect to its debt portion, investments are mostly made in AAA or AA+ rated debt instruments. These include bonds and deposits of financial institutions such as Bank of India, State Bank of Bikaner and Jaipur, IRFC and Power Grid.
Interestingly, the fund has invested in the debt offering from Dr Reddy’s Labs as well.
Overall, FT India Balanced is likely to offer steady and generally above-average returns over the long-term for investors.
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