Investors can buy units of DSPBR Balanced Fund, given its record of delivering steady returns over the long term. Over one-, three- and five-year time-frames, the fund has kept beating the returns of its benchmark, the Crisil Balanced Fund Index.

The fund has delivered a compounded annual return of 17.2 per cent over the past five years, which places it among the top few funds in its category. This return is much better than peers such as FT India Balanced and Tata Balanced and only marginally less than top performing funds such as HDFC Balanced and Birla Sun Life '95.

DSPBR Balanced, being an equity-oriented fund, has gained significantly from market rallies. During the second half of 2006, much of 2007 and in the prolonged rally that started in March 2009, the fund outperformed its benchmark by 10-25 percentage points. But during corrections, the fund has, at best, matched its benchmark or fallen 1-2 percentage points more. This indicates that the fund may not be a good hedge during downturns.

But given its strong track record of over 12 years, during which it has bettered the returns of even standard indices such the Nifty, the fund may be suitable for an investor's long-term portfolio as a diversifier. Given its significant mid-cap stocks exposure, the fund may be suitable for an investor with an average risk appetite.

Performance and portfolio : DSPBR Balanced maintains an equity exposure to the tune of 65-75 per cent of the portfolio. The fund also accords significant weight to mid-cap stocks (less than Rs 7,500 crore market capitalization), which account for 25-35 per cent of the total assets. This has helped the fund outperform in the 2006 and 2007 rallies, while in the 2009-10 rally the fund's NAV did not zoom ahead as much as, say, an HDFC Prudence or a Birla Sun Life '95, as large-caps led the recovery. While that may be the case, the fund tends to spread its risk quite thin, given that there are more than 80 stocks in the portfolio across market cycles. Even the top 10-20 stocks each have less than four per cent exposure. This apart, exposure even to individual sectors is not heavy either. No sector accounts for more than 10 per cent of the portfolio.

Banking has consistently remained the top sector invested in, while software, pharma and consumer non-durables too figure prominently. These sectors had a fantastic run in the 2009-10 rally helping the fund's returns.

DSPBR Balanced has a fairly high quality debt exposure, with the fund restricting its exposure to AAA and AA+ rated instruments. These include among others, bonds and NCDs (non-convertible debentures) of companies such as HDFC, HPCL, Tata Motors Finance and Axis Bank. Certificates of deposits in public and private sector banks and commercial paper are its other debt exposures.

This aspect possibly allows the fund to take marginal risks in terms higher mid-cap stocks exposure.

Related Topics
comment COMMENT NOW