Investors looking for a balanced fund that has managed to outshine pure equity schemes could buy units of Birla Sun Life ’95 (Birla 95). The fund has a long-term track record of delivering good returns.

Birla ’95 has managed to deliver an annualised return of 10.5 per cent over a five-year period. This matches the returns delivered by veteran pure equity funds and is well above this category average return of 5.7 per cent.

It has outperformed the balanced fund category average with returns of 5.6 per cent, 18.3 per cent and 10.5 per cent over one-, three and five-year time frames as well, by between 1 and 5 percentage points.

Over the last three and five-year periods, the fund has been among the top performers in the balanced fund category.

Interestingly, Birla Frontline Equity Fund, a large-cap equity product from the same house, has delivered 9.75 per cent for the same five-year period. Birla ’95 is a fitting alternative to pure equity schemes for investors who are risk-averse.

They can also consider investing through the systematic investment plan (SIP) route, which would work well in the current market correction phase.

With a long-term track record across market cycles, the fund’s return of 15.78 per cent over 10 years compares favourably with peers, such as SBI Magnum Balanced and DSP BR Balanced.

Performance and strategy

In the bull market rallies of 2003, 2007, 2009 and 2014, the fund delivered substantial returns of between 48 and 72 per cent, outperforming the category. The scheme has contained downsides well during the falling markets of 2008 and 2011.

The fund allocates 60-75 per cent of its portfolio to equities based on market conditions. Interestingly, it has drastically reduced its allocation to cash to almost nothing, since late 2012. The fund predominantly invests in large-caps with a mix of growth and value investment strategy. It holds more than 80 stocks allocated across 26 sectors. As the allocation in a single stock is below 2 per cent, it reduces the risk and is well-diversified.

Banks, technology and pharma are the top three sector choices on the equities side, making up one-third of the allocations. Private sector banking stocks such as ICICI Bank, HDFC Bank and Axis Bank are the preferred stocks that have yielded good returns over the past three years but have been underperforming over the past year.

Over the last two months, the fund added Just Dial, Bajaj Finance, Tata Steel and Cadila Healthcare, which are yet to pay off. Reliance Industries, Larsen & Toubro, Tata Motors and Maruti Suzuki India are the other top holdings in these sectors.

Around 30 per cent of the portfolio goes towards debt. The fund has churned its debt portfolio by exiting Certificates of Deposits and increasing allocation to government securities or sovereign (15 per cent) and corporate debentures.

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