In nearly four years of existence, the fund has established itself as a respectable member of its category through a cautious debt exposure that acts as a protective wall against an efficiently run equity portfolio.
The fund started on a shaky ground in December 1999 when everyone was running after tech stocks and the indices were scaling new peaks. It too parked a third of its assets in tech stocks in early 2000, just before the tech bubble went bust. Subsequently, the fund did broaden its sector allocation, but it remained buoyant on technology and continued to bank heavily on it until October that year. Consequently, it lost a sixth of its value by 2000-end. The first year was quite bad; the fund recorded negative returns in all the four quarters.
Throughout 2001, FT India Balanced managed to hold on to its ground even as stock markets fell. It gained 18 per cent during the pre-Budget rally and saved the returns in the fall after the Budget. When the markets came out of 9/11 worries, it followed the rally and ended the bearish year down 4.64 per cent as against an average 9.71 per cent loss of its peers.
The fund did well in 2002 thanks to the 20 per cent plus allocation to PSU stocks-banks, oil and disinvestment plays. It gained 18 per cent to find a place in the top five performers of the category. In bullish 2003, though it beat the category average comfortably with a 73 per cent return, the fund could manage a place only in the second quartile.
This year, too it has not performed extraordinarily, but has just about matched the category average. As of December 13, 2004, its year-to-date return of 10.32 per cent is marginally lower than 10.36 per cent average returns of its peers. FT India Balanced Fund has posted an average performance as its portfolio is tilted towards large-caps, which have not done as well as small-caps.
As far as the debt portfolio is concerned, the fund has shifted focus away from AA and AA+ papers and increased activity in government securities and AAA papers with frequent portfolio churning. As on November 30, 2004, the fund had more than 14 per cent exposure to government securities and AAA papers each.
Its recent show may not be great, but its long-term record has enough sparkle to make it a classic balanced fund.
This article was originally published on March 17, 2005.
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