K-Balance has diligently treaded a middle path to be called a decent performer. In its brief history of less than three years, it has never been a chart-topper, but has consistently delivered the goods. All its annual returns rank in the categories' top-half. Even in the recent turbulence, it has kept pace with its peers --- Year to date, its up 4.2% as against the category average of 3.8%.
The fund has consistently maintained an equity-oriented portfolio, with the equity debt allocation of 55:45. However, it has not been rigid about the allocation. For instance, as equities started looking up in early 2002, it reduced its bond stakes, from an average 42% in 2001 to around 32% until July, this year. And once again in August saw the bond allocation touched 39%.
The fund's equity portfolio has always been diversified across sectors. Like its peers launched around the same time, it also capitalised on technology boom of early 2000, but in a limited way. However, now its technology stakes are trimmed in favour of defensive sectors like Pharma and FMCG. The fund has been conservative with its investment in the auto and energy stocks. Indeed, what has been more striking is its current mid-cap orientation. As compared to 15% allocation to these stocks in January this year, it has raised it to 25% now. The rationale: mid-caps offer active trading opportunities. And has used this tool quite successfully --- mid-cap stocks of January are not in the portfolio today. Well, that hasn't been the case with its large-cap holdings where it has largely followed a buy and hold strategy.
K-Balance has a high preference for high quality bonds. Initially, it was overweight in corporate bonds, but the soft interest rates in 2001, forced the fund to change its gear towards government securities. Currently, the debt portfolio is a mix of government securities and top rated corporate bonds.
The fund looks in the pink of its health yet its mid-cap orientation can be unpleasant on occasions. Overall, the management's even-handed approach and fund's relative performance makes it a worthwhile choice for conservative long-term investor.
This article was originally published on October 09, 2002.
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