Birla Balanced 95: Rain or shine, delivers consistently

The fund, which has been around for over 10 years, has outdone its category across periods

With equity markets rallying, risk-averse investors can find solace in Birla Balanced 95 fund. Over the last one year, its returns are among the top, 23.9 per cent as against the category returns of 19.5 per cent.

The fund has been around for more than 10 years and has consistently remained in the top quartile in terms of performance. In the last three and five years, it managed to outshine the average category returns, giving annualised return of 20.1 per cent and 17.6 per cent, respectively.

In the last one year, the proportion of equity has been in the range of 65-71 per cent.

The fund generally has a multi-cap orientation. However, currently it has a large-cap bias – with about 61 per cent of stocks in large-caps (market capitalisation of over ₹10,000 crore); a year back, the share was a lower 50 per cent.

Sometimes, the fund does take cash calls, which is evident from the 10-odd per cent exposure in cash in October 2016, when markets appeared overheated.

Recently, it changed the scheme’s mandate to allow its fund manager to invest up to 10 per cent of the portfolio in units of Real Estate Investment Trust (REIT) and Infrastructure Investment Trust (InvIT).

It remains to be seen to what extent the fund actually invests in such units.

Betting on cyclicals

The fund is relatively overweight on financials, healthcare and auto as compared to its peers, while remaining underweight on construction and communication. It is betting on cyclicals, with very high exposure to financials and the strategy should pay off, if the economy picks up.

HDFC Bank, Infosys and ICICI Bank are among its top picks. In the last one year, it has added exposure to L&T Finance (1.5 per cent), Cholamandalam Investment (1.3 per cent) and PNB Housing Finance (1.1 per cent).

It has also completely got off the counters of Axis Bank, Inox Wind and Hero MotoCorp. The fund usually goes for more diversification than its peers, holding about 90-plus stocks in its portfolio as against its peers ICICI Prudential Balanced and Tata Balanced), which maintain 50-60 stocks.

YES Bank (delivering 79 per cent return), Indian Oil Corporation (97 per cent) and Vedanta (206 per cent) were among the largest contributors to its overall returns in the last one year.

In contrast, IT and pharma stocks were a drag, with Infosys and Sun Pharma each down 16 per cent in the last one year.

Debt portfolio

With interest rates falling, the fund is not taking big duration calls.

Currently, the modified duration of its debt portfolio is six years as against 8.2 years, 12 months back. However, the fund has increased the exposure to lower-rated bonds, to give a kicker to yields.

Nonetheless, the fund has relatively less exposure to low-rated AA bonds than its peers that, on an average, have about 13 per cent exposure to such bonds.

Besides Central government G-Secs, Power Finance Corporation (1.3 per cent), Rajasthan State Development bonds (1.2 per cent) and Bihar State Development bonds (0.7 per cent) were its top debt holdings.

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