Launched in September 2000, HDFC Balanced Fund is classified under the balanced category of CRISIL Mutual Fund Ranking. It has been ranked in the top 30 percentile (CRISIL Fund Rank 1 or 2) over the past 24 consecutive quarters as of September 2016 (i.e. since December 2009).
The fund’s primary objective is to generate capital appreciation along with current income from a combined portfolio of equity and equity-related and debt and money market instruments. The fund is managed by Chirag Setalvad. It had quarterly average assets under management of Rs 6,841 crore at the end of September 2016 quarter.
The fund has given handsome returns to investors over one year; three, five, seven and ten years, outperforming the category (funds ranked under the balanced category in September 2016 CRISIL Mutual Fund Ranking) and the benchmark (CRISIL Balanced Fund - Aggressive Index) consistently. The fund’s trailing three-year performance delivered annualised returns of 22.23 per cent against the category’s 18.87 per cent and the benchmark’s 11.18 per cent.
After the subprime crisis, the fund delivered higher returns than the category and the benchmark across bearish and bullish phases. In the ongoing phase of Chinese slowdown (March 2015 - November 2016), the fund delivered 6.00 per cent annualised returns, while the category and the benchmark returned 3.69 per cent and 0.42 per cent, respectively.
An investment of Rs 1,000 in the fund on April 1, 2002 (inception of the benchmark) would have grown more than 11 times to Rs 11,222 on November 17, 2016 at an annualised rate of 17.96 per cent. A similar investment in the benchmark and the category would have grown to Rs 5,416 (12.23 per cent) and Rs 11,406 (18.09 per cent) respectively.
Similarly, Rs 1,000 invested per month in the fund over the past 10 years via systematic investment plan (SIP), totalling Rs 1.2 lakh, would have grown to Rs 2,80,293 by November 17, 2016 at 16.28 per cent annualised returns. In comparison, a similar amount invested in the benchmark would have returned Rs 1,87,659 at 8.71 per cent.
Over the past three years (ending October 2016), the fund, on average, maintained 73.83 per cent exposure to equity and 23.27 per cent to debt.
In the equity part of the portfolio, over the past three years, the fund had exposure to 86 stocks across 26 sectors.
Over this period, the top five sectors, on average, constituted 65.30 per cent of the equity portfolio. The banking sector had the highest exposure of 24.81 per cent (of the equity portion) followed by software (14.42 per cent), pharmaceuticals (10.80 per cent), industrial projects (8.57 per cent) and construction projects (5.99 per cent).
On average, about 75 per cent of the equity portfolio is consistently held indicating strong conviction of the fund manager in the stock picks. Top holdings among the consistently held stocks include Infosys, ICICI Bank, HDFC Bank, Reliance Industries and State Bank of India.
The debt portion is well guarded in terms of asset quality. Over the past three years, 88 per cent of the debt portfolio, on average, was held in sovereign and highest-rated (AAA / A1+) securities.