Canara Robeco Balanced fund puts in around 70 per cent of its portfolio into equities, with the remaining in debt. In both components, the fund follows a relatively safe strategy.
This makes it a suitable option to have in a portfolio when markets correct; the Canara Robeco Balanced fund has usually dropped lower than peers during sliding markets in the past six years. The fund’s five-year return of 15.4 per cent is higher than the category average of 13.2 per cent.
Its current portfolio consists mostly of bluechips, which can serve it well if the markets take a breather now, with mid- and small-cap stocks having already galloped.
The fund has also latched on to the opportunity in government securities, buying into gilts from June this year to 6 per cent now.
The equity portion for Canara Robeco Balanced fund has been around 75 per cent since the start of the current rally last September. This component was lowered to 65-66 per cent during prolonged declines, as seen in 2011 and 2008, in favour of debt.
Stocks that the fund invests in are geared towards large-caps; the latest November portfolio, for instance, is almost entirely made up of stocks such as HDFC Bank, Larsen & Toubro, BPCL, Tata Motors and so on.
This is in contrast to peers such as SBI Magnum Balanced or HDFC Prudence, where mid- and small-cap exposure is high. But the strategy also limits the gains Canara Robeco Balanced makes during market upswings.
In the 2011 market, the fund lost just 12 per cent compared with the category’s 18 per cent. In the largely sideways market for much of 2013, it did far better than current chart-toppers such as ICICI Pru Child Care and HDFC Balanced. But in the 2012 run, the fund’s returns were on par with the category average.
In its debt component, Canara Robeco Balanced usually invests in medium-term corporate debt, short-term CBLO market and certificate of deposits. Investments are made in AA or AAA-rated debt, adding another layer of safety. It has recently moved into longer-term debt, which may pay off as the interest rate cycle turns down.
The fund is suitable for investors looking for safer equity bets and with a longer-term horizon. Its one-year return of 46 per cent places it in the mid-quartile of funds in its category. In three- and five-year periods, though, it ranks in the top quartile. The fund quickly snapped up stocks in sectors such as infrastructure and cement when the rally began last year.
Sector movesOther timely sector choices include textiles, added in early 2013, and logistics this year. Banks and software, usually the top sector holdings, have been adeptly juggled through the years as well.
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