Investors with a moderate risk appetite looking for long-term exposure in equities can consider periodic exposures in Canara Robeco Balance Fund. The fund has recorded a three-year annualised return of 16 per cent, outperforming the average returns of large-cap funds (13 per cent) and other balanced funds (15 per cent).

The fund adopts a blend of growth and value strategy, investing in both large as well as mid-cap stocks.

Moreover, the fund invests about one-third of its assets in debt, which helps ride the volatility in the market.

The fund actively shifts its equity allocations between 66 per cent and 75 per cent of its assets, depending on market phases. For instance, in the beginning of 2013 and towards the end of 2016, when markets witnessed a sharp rally, the fund lowered its equity allocations to about 66 per cent.

Switching to debt aside, the fund also takes an active call on cash. While the fund’s conservative approach helps it cap downsides, it also limits the upside in market rallies, leading it to underperform peers.

For instance, in 2011, the fund fell 8.7 per cent while the benchmark Crisil Balanced index tumbled 14 per cent. But over the past year, the fund has delivered 21.5 per cent, underperforming funds such as HDFC Prudence or ICICI Pru Balanced which have higher exposure to mid- and small-cap stocks. Thus, the fund may not suit risk-takers looking for chart-topping returns.

Banks remain the fund’s most favoured sector. In recent times, the fund took exposure in Punjab National Bank and RBL Bank while exiting Bank of Baroda. It also actively churns its portfolio and bets on momentum.

Allocations reduced The fund has drastically reduced allocations in out-of-flavour sectors such as software and pharma that are currently facing challenges. Also, being conservative, it has trimmed allocation in cement stocks which had a strong rally. Consumer non-durables and automobiles continue to be on a strong wicket are among the top preferred sectors.

Canara Robeco Balance holds about 60 stocks in its portfolio. The allocation towards individual stocks is diffused and barring a few, is not more than 2.5 per cent of its portfolio. It has gradually upped its exposure to stocks in the pesticides sector over the last one year while exiting engineering stocks.

The fund also follows a conservative approach in its debt portfolio. It invests in corporate debentures/bonds of top companies with highest rating, such as HDFC, REC and PFC. It also has more than 6 per cent exposure of total portfolio in government securities.

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