Investors willing to take systematic exposure to equities at this juncture but not wanting to go the whole hog — given the market uncertainty — could consider HDFC Balanced fund.

Currently, it has about 67 per cent exposure to equities while the rest is into debt-based instruments, giving comfort of protection against market corrections. While it may have had higher exposure to mid-cap stocks in the past, currently it holds mostly large-cap stocks. Moreover, the fund has been a consistent performer, capitalising on opportunities in the equities and debt space and remaining among the top 5 across time horizons – be it one, three, five or 10 years.

In the last one year, the fund gave a return of 18.6 per cent as against 13 per cent for the category. It managed to outperform most of its peers – ICICI Prudential balanced (16.5 per cent), L&T Prudence (18.3 per cent), Birla Balanced ’95 (14.5 per cent) and SBI Magnum balanced (12.5 per cent). Its bets on financials and energy (Reliance industries) paid off in the last one year. It also outperformed HDFC Prudence, which gave a return of 17.3 per cent last year. Most of the time, the fund maintains equity exposure in the range of 66-71 per cent.

Equity portfolio HDFC Bank, Reliance Industries, Aarti Industries, SBI and Vedanta were top contributors to its returns in the last one year. In contrast, Tata Motors-DVR, Aurobindi Pharma and Infosys have been a drag on its portfolio. Last year, it entered the counters of HDFC, BPCL and KEC International while exiting Maruti Suzuki, Bayer CropScience and Solar industries.

HDFC Bank, Larsen & Toubro, Reliance Industries, ITC and ICICI Bank are its top five stocks in its equity portfolio. It is also well-diversified with about 65 stocks. Financials, energy and automobiles are its top three sector bets; while it’s overweight on financials and energy as compared to its peers, it is underweight on healthcare and engineering. In the last one year, it has reduced exposure to sectors of public sector banks, large software companies while increasing exposure to housing finance and cigarettes.

Debt As regards debt portfolio, it shows greater risk (credit) aversion than its peers, holding more government securities than corporate bonds. Currently, it holds debt portfolio with an average maturity of 4.4 years, which is slightly lesser than its peers such as SBI Magnum Balanced (5.4 years) and Tata Balanced (5.0 years). It has reduced the maturity of the portfolio from about 6.6 years that existed a year back.

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