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Nilanjan Dey

WITH the average equity fund going nowhere and its debt counterpart on fairly shaky ground, it might be a good idea to look at that often-ignored breed, the balanced fund.

Balanced funds as the name suggests have a mix of assets, dispersed over equity and debt securities in irregular proportions. As things stand today, there are a good number of balanced funds in the country. And some of them, like one or two schemes launched by LIC Mutual Fund, can be traced back to the early years of the last decade or even before that.

However, not all of them buy into the two broad classes of assets (that is, equity & debt) in what some say is the ideal ratio of 60:40. `How balanced is a balanced fund?' therefore, is a question that investors can always ask before committing their resources.

Under the current circumstances, the average scheme in this category is small in size. Among the larger ones are funds managed by Unit Trust of India (US-64 with assets over Rs 13,000 crore is the largest), Alliance Capital, Birla MF and Canbank MF. US 64 apart, the others are in the Rs 100-300 crore range.

More important perhaps are questions over their performance. Consider, for instance, the matter of five-year returns from this genre of funds. The few that can be considered (not all players make it to the five-year seniority) include Alliance '95, Canganga, Cantriple+, Zurich India Prudence, Dhansahayog, Dhanvidya, GIC Balanced, JM Balanced and SBI Magnum Balanced.

So who are the winners and losers in this list? According to thedata compiled by Value Research, Alliance 95 seems to be standing out, thanks to its 35 per cent-plus returns. Zurich India Prudence follows with 22 per cent. Winners also include the growth option of JM Balanced (around 18 per cent). Among the losers are LIC MF's Dhanvidya (minus eight per cent) and Dhansahayog (minus three per cent).

Special mention may be made of schemes in the UTI stable. Information available suggest that the controversial US-64 has posted nearly 20 per cent returns since launch. US 95 does not compare too poorly either; it has recorded over 17 per cent since its introduction.

However, the UTI Retirement Benefit Unit Plan, which was launched in December 1994, has scored a low nine per cent.

Another indicator might be the balanced funds' average return vis-a-vis the popular stock market indices such as the 50-stock Nifty of the National Stock Exchange. These funds, with an average of 9.38 per cent, seem to compare well with the Nifty's 4.6 per cent.

On the new launch front, information disseminated by SEBI indicates that Zurich India has mooted an index fund. Already, more than half a dozen index funds invest either in the Sensex or in the Nifty.

Meanwhile, as transaction trends for the month (up to April 4) suggest, gross purchases of equity were less than gross sales by Rs 128.94 crore.

However, gross purchases of debt were more than gross sales by Rs 84.2 crore.

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