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Suresh Krishnamurthy

BARRING Zurich India Prudence, the performance of balanced funds was not too impressive over the past few years. In the quarter ended March 2002, however, they too have come to the party. Of the 43 open-end balanced funds, 21 registered higher growth in net asset values than that recorded by the narrow indices, Sensex and Nifty. Considering that a portion of the fund is invested in debt, the performance is impressive.

Interestingly, 20 funds appreciated over 10 per cent. This is more than the returns generated by a number of equity funds. Major performers in the category of balanced funds are Escorts Balanced Fund, Pioneer ITI Balanced Fund, Zurich India Prudence, IDBI Principal Balanced, HDFC Balanced, Dundee Balanced and Tata Balanced. The performance of IDBI-Principal's Child Benefit Plan was also impressive and figured among the toppers.

Except for Escorts Balanced Fund and Pioneer ITI Balanced Fund, the equity component in the case of the other top-performing balanced funds was 53-65 per cent. In Pioneer ITI Balanced Fund, the equity component was almost 70 per cent, and in Escorts, almost 80 per cent.

Not all funds with an allocation to equity of more than 50 per cent delivered returns of over 10 per cent. Funds such as Birla Balanced, SBI Magnum Balanced and GIC Balanced registered returns of less than 10 per cent, with equity exposure of more than 50 per cent. In particular, Birla Balance, with around 75 per cent equity, failed to figure among the toppers.

MIPs fail to inspire: Along with the balanced funds, monthly income plans, which invest anywhere up to 20 per cent in equity, also registered growth in NAV. However, the returns from all the monthly income plans, barring Templeton India MIP, were lower than those recorded by the debt funds offered by the same asset management company. Even in Templeton's MIP, the returns in excess of Templeton India Income Fund were marginal. The returns, when adjusted for the higher risk involved due to exposure to equities, are unimpressive compared to the debt funds.

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