The investor’s preference for different asset class keeps shifting based on market actions. Some time investors may be overexposed or underexposed to a particular asset class leaving the portfolio open to market’s unpredictability. Therefore it is important to balance it out to keep one’s portfolio well allocated among debt, equity and other asset classes.
This is where Balanced Funds come into the picture. Investors looking to strike a balance between safety and capital appreciation in the face of ever-changing debt / equity market scenarios would find this as an appropriate investment option.
Fund’s Investment philosophy
Launched in 1995, UTI Balanced Fund is a key offering in balanced category. The fund maintains equity – debt allocation in the range of 40%-75% and 25% – 60% respectively. The fund aims regular income together with capital appreciation by following a disciplined and balanced approach to asset allocation. The fund is managed with an equity tilt and the entire alpha is generated out of equity portion. The debt is managed on a conservative basis and is invested mostly in long term corporate bonds. The fund manager avoids taking allocation calls between equity and debt unless there are very strong signals of equity underperforming by a wide margin. Historically, the equity is closer to the maximum level of 75% while in debt segment the fund focuses on corporate bonds of maturity of two to three year. On a tactical basis, the fund takes exposure in G-Sec to the extent of 20% to 30% of the debt portfolio in case of fund house’s view is bullish on G-secs. Currently, the fund has around 62% weight in large caps and balance in mid and small caps and would aim to maintain this weight. The fund would strive to derive alpha from the investments in mid and small caps. In terms of mid caps, the major sectors where the fund is invested are textiles, metals , media & ent.
Why UTI Balanced Fund
· 22 years track record – The fund has withstood various market cycles over 22 years. It has outperformed its benchmark (Crisil Balanced Fund Index) on 1/3/5 year time periods. The fund has generated a return of 15.66% on (CAGR basis as on March 31, 2017) since its inception.
· High quality portfolio mix – The fund’s portfolio consists of companies with good return potential, good return ratio and strong track of corporate governance. The debt segment focuses on AAA / AA+ rated securities with a focus on minimizing credit risk.
· Tax Advantage – The fund having exposure in excess of 65% and above enjoys the tax advantage applicable to an equity scheme. The dividend distributed is tax free and there is no long term capital gains tax.
· Dividend Distribution Track record – The fund maintains a good dividend distribution track record. The fund has declared regular dividend since 2003 (except 2013). In the last two Financial Years, the fund has declared eight quarterly dividends.
The fund is suitable for those who are looking to diversify their portfolio and build long term wealth. Investors looking for equity returns with a limited downside risk will also find this appropriate.