These funds possess the right ingredients of self discipline to not only find a place in one's core portfolio but should also be the first fund for a newbie investor
28-Nov-2013 •Research Desk
At Value Research, we have been proponents that the first fund that investors should invest in should be a balanced fund. Modern portfolio theory states that sticking to asset allocation can result in superior returns. The balanced funds, or the equity-oriented hybrid funds come with the inherent asset allocation model that it follows. This approach not only ensures that irrespective of market movements, the fund maintains a defined equity-debt ratio. The range of balanced funds, have a variable allocation that starts from anywhere above 65 per cent in equity going all the way up to almost 80 per cent.
Balanced funds are not meant to outperform the broad equity fund categories, but they have done better over the past 5 years because they have had a lesser fall. These funds have managed to check their fall due to the in-built discipline to maintain the equity-debt asset allocation.
They are tax efficient by dynamically managing the equity-debt allocation, which helps in its performance. These funds are not for those looking for income, but have a compelling role to play in a core portfolio.
These are India's finest balanced funds:
Canara Robeco Balance
Edelweiss Absolute Return
ICICI Pru Balanced Advantage
Tata Balanced Plan A
