Investors looking for long term portfolio stability with low risk and above-average returns can consider this fund. The scheme is currently investing over 65 per cent of its corpus in equity and the remaining in debt, with frequent rebalancing, which helps in reducing portfolio volatility. With assets of Rs.4, 570 crore as on September 30, 2015, the fund is bigger than several diversified equity schemes.
The equity component of the portfolio is well diversified and has a fairly high exposure to mid- and small-cap allocations, which has helped its performance in years when the markets have soared.
The portfolio is made up of quality heavyweight stocks like Infosys, HDFC Bank and ICICI Bank. The mid-cap space has the presence of stocks like Aurobindo Pharma, Divi’s Laboratories and Solar Industries, among others.
At the same time, the debt component of the portfolio is made up of good-quality bonds, which are dynamically managed and have benefited from the recent fall in interest rates. Debt investments are in high-quality financial institutions with the highest AAA rating making it a very low-risk affair. Higher debt allocation enabled HDFC Balanced to contain downsides substantially as witnessed during the corrective phases of 2008 and 2011.
These qualities have helped this fund in outperforming several diversified equity funds over the long term. What it indicates is the fund’s positioning with a lower risk profile than diversified funds. The big asset size has also meant that the fund has a huge portfolio of about 57 stocks, which is much higher than its peers and in a way risky because it means more active management of its portfolio, which can be impacted by market falls and thus, affect returns.
But, if you are looking for a fund that is disciplined in maintaining its asset allocation between equity and debt with rebalancing, this is the fund for you.