Despite the lack of continuity in management, Canara Robeco Balance's recent performance has been impressive...
24-Mar-2009 •Research Desk
This fund has a long and complicated history. It is the product of three balanced funds of two asset management companies -Canbank Mutual Fund (now Canara Robeco) and GIC Mutual Fund. In 2008, the fund was merged with Canara Robeco Balance II and the final entity has been named Canara Robeco Balance.
Due to the lack of continuity in management, it's tough to nail down this one's style. And since December 2007, there have been three fund manager changes with the current one taking over in July 2008. At times this fund has been a bit too bold. A 41 per cent allocation to just one sector or 20.83 per cent allocation to one single stock are two instances. Yet, there have been times when it has moved to the other end of the spectrum.
In certain periods, the equity-debt allocation crossed the defined limits. October 2007 to January 2008 is one such example when the equity allocation averaged at 80 per cent.
Ditto during August-December, 2005. But the risk was mitigated to a small extent by the heavy large-cap exposure. But since July 2008 (when the current fund manager took over), there has been a significant decline in large caps and the equity allocation has also begun to dip. But at the same time he has increased the number of stocks in the portfolio from around 30 in June to 43 in December and 39 at present.
On the debt side, the fund is dabbling more in long term paper probably expecting interest rates to fall. The fund at one time bought substantial low quality paper, but that was a long time ago. Going by its current ownership, it does not seem likely to repeat that move.
Over the past 15 years, the fund has outperformed the category average in 9. Its performance in 2007 was just about average but it has been holding its own in the downturn in 2008. For instance, in the September quarter when most funds delivered negatively and the category average was -3.17 per cent, this fund returned almost 0.80 per cent.
Although the fund has not been as impressive as its peers in the rising markets but its ability to contain downside makes it a worthwhile choice for the long-term investors. Its return of around 14.60 per cent over the five year period ending on January 31, 2009 is ahead of the category by 4 per cent.