VR Logo

Sleep Easy

A large-cap dominated equity portfolio along with cautious debt holdings mean that FT India Balanced would make you sleep well even in uncertain times

You might not get extraordinary returns here, but this fund's consistency and over 15 per cent annualised returns since launch in December 1999 make it a classic balanced fund.

A first look at the fund's equity portfolio gives a slightly different feel. An equity allocation between 60 to 70 per cent (close to 70 per cent in recent times) looks aggressive. Look closer and the picture changes. The fund manager keeps a quality portfolio by maintaining a large-cap bias and limiting the exposure to riskier mid-cap stocks to around 30 per cent. Small-cap stocks are generally found only in traces. On the debt side as well, the fund prefers high quality corporate bonds and gilts.

When mid-caps raced ahead in 2004, FT India Balanced clocked a below average performance because of its large-cap stocks. A low exposure to financial services stocks was one reason for its mediocre performance that year. The fund had been maintaining nearly 9 per cent exposure to banking stocks till the first quarter, but as banking stocks hit a rough patch in the second quarter, it quickly cut the allocation and missed the rally when they rebounded later.

As on September 28, 2005, the fund has gained 23.55 per cent from the beginning of the year and is marginally below the category average of 23.92 per cent. This year, a 5 per cent exposure to metal stocks has slowed down the fund. Select energy picks too have failed to fire.

But over its tenure, FT India Balanced's track record has been inspiring. The fund had an inauspicious start in December 1999. It lost a sixth of its value by 2000-end. However since then, it has gained in stature. The next year, FT India Balanced managed to hold on to its ground even as stock markets fell. The fund did well in 2002 thanks to the 20 per cent plus allocation to PSU stocks. 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.

Cautious investor would like this fund for its large-cap equity portfolio and safe debt papers.