For Zurich India Prudence, it has been a balanced journey so far with an active management of assets across the two asset classes. Unlike most of its peers, the fund has avoided the tarp of equities for earning that "extra" return and has its risk guards firmly in place.
The fund is guided by a simple yet pertinent philosophy that building wealth is not to earn very high returns periodically, but to earn reasonable returns with higher consistency and to avoid big losses. Two, when volatility is high, returns earned over long periods of time can get wiped out is relatively short time spans.
To this effect, Prudence has stuck to the mandated debt equity mix and asset allocation between debt and equities in the band of 40:60 and 60:40, depending on the risk-adjusted return expectations. The fund has also held on to a diversified portfolio of bluechip stocks, which offer strong growth at attractive valuations. Thus, even at the peak of the technology bull-run, the fund held only around 15% of its assets in tech stocks and lost much less than some of its aggressive peers. Aided by a steady corpus, the fund has effectively utilised the cash component to juggle between debt and equity. For instance, during the tech-led meltdown, the fund hiked its debt holdings to cushion the fall in NAV.
Active management and commitment to the stated objective have propelled Zurich India Prudence to emerge as an above average performer. The fund has emerged an ideal investment for long-term investors, seeking steady returns with low volatility.