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JM Balanced

Despite steady long term returns the fund is yet to acquire a critical mass

Aided by a small size and active portfolio management, JM Balanced (Growth) has emerged as a top performer in the balanced category. Despite its mandate for growth, the fund paid its maiden dividend in February 2001.

JM Balanced was launched with the objective to invest 60 per cent of its corpus in debt with the rest in stocks. The higher debt holdings in initial years augured well for the fund with a high interest rate regime. However, the fund changed tack in 1999 when dividend income was made tax-free from open-end funds with over 50 per cent holding in equities. Yet, the fund has kept its equity exposure on a tight leash, which has seldom breached 60 per cent. While the fund was overweight on the technology sector for most part of 2000, it has been prompt to diversify in the current calendar. The quality of the fund's debt exposure and maturity profile is not available for comment. The fund's cash holding has been unusually high, presumably to ward off any redemption pressure that could destabilise a small-size fund.

Aided by the rare distinction of paying a dividend in the growth option, JM Balanced (Growth) has doled out a whopping three-month return of 32 per cent. This is attributed to the AMC ploughing the load-fee back to the growth option, earned during dividend distribution earlier this year. The rising net asset on stagnant unit capital has boosted the NAV. On the other hand, the returns from the dividend option is still at a (-) 9.83 % over the same period.

Apart from the short-term performance, JM Balanced has had impressive long-term returns with three-year return at 20.13%. However, the fund is yet to acquire a critical mass. Thus, despite a long history, the absence of economies of scale means that the annual expenses continue to be high.