For Zurich India Prudence, it has been a balanced journey so far with an active management of assets across the two asset classes. Unlike most of its peers, the fund has avoided the trap of equities for earning that "extra" return.
The fund is guided by a simple yet pertinent philosophy that building wealth is not to earn very high returns periodically, but to earn reasonable returns with higher consistency and to avoid big losses. Two, when volatility is high, returns earned over long periods of time can get wiped out in relatively short time spans.
Prudence has stuck to the mandated debt equity mix in the band of 40:60 and 60:40, depending on the risk-adjusted return expectations. The fund also holds a diversified portfolio of bluechip stocks that offer strong growth at attractive valuations. Thus, even at the peak of the technology led rally, the fund held only 15% of its assets in the sector and lost much less than its aggressive peers. Currently, the fund's divide between growth and cyclicals tilts in favour of the former in the ratio of 37:24. Aided by a steady corpus, the fund has effectively utilised the cash component to juggle between debt and equity. For instance, during the tech-led meltdown, the fund hiked its debt holdings to cushion the fall in NAV. The fund in its debt portfolio invests in quality instruments and has chosen to stay out of Gilts, thus limiting the volatility on the debt front as well.
Active management and commitment to the stated objective have propelled Zurich India Prudence to emerge as an above average performer. The fund has emerged an ideal investment for long-term investors, seeking steady returns with low volatility.