HDFC Balanced, despite being invested in equities upto 60% in the bearish markets, has been able to limit its downside risk. However, it is too early to talk about sustainability of performance
23-Jul-2001 •Research Desk
HDFC Balanced fund, launched in August 2000, seeks to invest in a portfolio with Equity-Debt mix in the ratio of 60:40. The fund has over the past six months ending July 13, 2001 lost 5.34% as against a loss of 9.47% by the category. Thanks to the disciplined strategy that has had the fund stick to a 60:40 divide between equity & debt. Further, the fund's equity portfolio has been a good blend between growth and cyclical stocks.
Though, the bourses, during the launch of the fund, were way off their peak levels of March 2000, the fund, however, chose to be cautious. The fund initially started off with a fourth allocation to equity and only gradually hiked it to 60% by the year-end, thus picking up stocks at attractive valuations. The growth sectors of Technology, FMCG and Pharma accounted for 45% and the balance by cyclical stocks from the sector of Banking, Petrochemicals & Oil & Gas and Metals. However, over the past few months, the fund has pared its allocation to the technology counter (10%) for a greater preference for FMCG stocks (18%).
On the debt front, the fund has so far invested only in AAA quality papers, which is again predominantly invested in Corporate papers with only a marginal allocation to Gilts (4.5%), thus minimising the fund's sensitivity to interest rate risks. However, information is not available to comment on the maturity profile of the debt portfolio.
Though, the fund's brief tenure has so far coincided with a bearish onslaught in the markets, it has very well limited its downside risk despite being invested in the equities to the extent of 60%. The fund's loss since its launch is at 5.4%. However, too much cannot be read into the performance of the fund, for it is still too short a tenure.