Earlier known as Tata Equity Growth Fund, Tata Twin Balanced was merged into it and is now known as Tata Balanced. Thanks to this past, it fluctuated between appearing like a debt-oriented hybrid fund (30 per cent equity allocation in March 1996) and a diversified equity fund (86 per cent in equity in September 1998). Over the past few years, it has stabilised at around 65 per cent. This year, the equity component has risen to an average of 70 per cent.
The last few years have been quite good for the fund, with the 5-year return of 31 per cent, it has comfortably beaten the category's 27.5 per cent. And in the bargain it has earned a 4-star rating. In the past six quarters, it has underperformed the category average thrice and overperformed the same number of times.
In 2003 the fund got interested in mid- and small-caps and they began to dominate the equity portfolio. The strategy paid off well with the fund being a top quartile performer. Though it stayed aggressively invested in mid- and small-caps, the next year, 2004 witnessed an above-average performance. In 2005, the new fund manager Venugopal took over but the fund underperformed the category. In 2006, large-caps began to dominate and the fund once again delivered a great performance. Large-caps continue to dominate this year.
By and large, the fund plays it safe. Where corporate debt is concerned, the fund plays it safe and invests only in AA+ and above rated paper. On the equity side too, it looks for safety in numbers, with as many as 56 stocks across 11 sectors. Technology is the most preferred sector (25 per cent) followed by basic/ engineering (11 per cent). However, there were periods when the fund was dangerously invested in just 10 stocks and other times when it went over board with 84 stocks (March 1997).