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Prudence v/s Balanced

HDFC Prudence has an aggressive streak, while HDFC Balanced shows a conservative approach…

I am a first time investor and am planning to invest in a hybrid: equity oriented fund through SIPs of Rs 5,000. Between HDFC Prudence and HDFC Balanced, which one would be a better option to invest in for a 4-5 year investment?
- Ananda Kinkar Barooah

Selecting from two of the best performing funds in a category is a tough choice. The Value Research star rating is a good starting point to select the relatively better funds within a category. The star rating is based on risk-adjusted rating system and acts as the first filter in fund selection. A higher rating indicates good performance and one should ideally look for funds that have consistently been rated high. As both these funds are similarly rated, you can invest in either of them. While there is no arguing with the numbers in either case, HDFC Prudence does take a more aggressive route, though has rewarded its investors for the risk taken. But those who want to stick with a conservative approach would be more comfortable with HDFC Balanced.
You should invest regularly and track the performance of your investment to confirm its progress in line with your investment goal.

Fund Scheme  Rating  3-yrs ret (%)  5- yrs ret (%)
HDFC Prudence ***** 24.73 19.58
HDFC Balanced ***** 22.96 16.98
Return as on July 11, 2011, Rating as on June, 2011

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