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The stock market swinging widely on a daily basis is enough to cause the jitters.
So, for those looking to contain volatility, Tata Balanced Fund is a good bet. An equity-oriented balanced fund with a five-year return of 16.3 per cent, it has beaten even large-cap diversified equity funds which averaged 10.4 per cent.
Across one-, three-, and five-year timeframes, Tata Balanced Fund has stayed in the top quartile of funds in its category, beating the category average by a margin of four to nine percentage points.
The fund has also contained losses well during market slides or volatile times; in the largely sideways market of 2013, for instance, the fund lost 8 per cent, lesser than most peers. The fund is benchmarked to the Crisil Balanced Index.
Portfolio and strategy The fund has maintained equity exposure at 70-75 per cent across periods.
While most stocks in the portfolio are large-caps (those with a market capitalisation of over ₹10,000 crore), the fund includes a good mix of mid- and small-cap stocks to spice up returns, depending on market conditions. They formed over 20 per cent of the portfolio from mid-2014 onwards, for instance. Picks such as IFB Industries, MBL Infrastructures, and Kajaria Ceramics paid off. But in the bearish markets of 2011 or 2013, mid- and-small-cap stocks formed less than 15 per cent of holdings.
In another risk-mitigation move, the fund doesn’t usually take more than 5 per cent portfolio exposure in a single stock. Sector-wise , the fund recently upped holdings in infrastructure, auto, and chemicals. But the trinity of banks, software, and pharmaceuticals still holds the maximum sector weight. In its debt portfolio, Tata Balanced Fund actively juggles between government securities, certificates of deposits and NCDs. For instance, it neatly rode the Gilt wave in 2014; government securities still account for the most weight at 18 per cent of the portfolio.
Corporate debt was on top in 2011 and 2013 when corporate interest rates were higher and bank credit began to wane.
With interest rates now trending down, a longer-term debt portfolio bodes well. Debt investments are restricted to high-quality AAA, AA, A1 and A2 instruments from institutions such as Bajaj Finance, M&M Financial Services, REC and PFC.
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