GEMGAZE

January 2019

The consistent performance of all five funds in the January 2018 GEMGAZE is reflected in all the funds holding on to their esteemed position of GEM in the January 2019 GEMGAZE.

HDFC Balanced Advantage Fund (formed from the merger of erstwhile HDFC Prudence Fund and HDFC Growth Fund) Gem

HDFC Balanced Advantage Fund is the largest fund in the category with assets amounting to Rs 38,502 crore. The fund, managed by Prashant Jain, widely regarded as one of the most competent money managers, has delivered an annualised return of 18.55% since its inception. HDFC Balanced Advantage Fund, with its long-standing stellar track record of delivering 18.62% compounded annually over the last 10 years, towers over the category average of 12.97% annually over the same period. Over a three- and five-year horizon, the fund returned an annualised return of 11.93% and 15.99%, respectively as against the category average returns of 8.9% and 11.75%, respectively, over the same period. The fund earned a return of -3.97% in the past one year as against the category average of 1.02%. But in the past 3 months the returns have been 6.8% as against the category average of 3.44%. HDFC Balanced Advantage Fund has a diversified quality portfolio with a blend of growth and value. The allocation to a single stock has been capped at around 9.03%, with the highest currently allocated to ICICI Bank. There are 73 stocks in the portfolio and the top three sectors are finance, energy, and construction, which constitute 56.95% of the portfolio. The portfolio turnover is 18% and it has an expense ratio of 1.98%. The fund is benchmarked against NIFTY 50 Hybrid Composite Debt 65:35.

ICICI Prudential Equity and Debt Fund (erstwhile ICICI Prudential Balanced Fund) Gem

Launched in November 1999, ICICI Prudential Equity and Debt Fund is a very popular product in this category. The fund has earned a return of -2.47% over the past one year as against the category average of -4.28%. But in the past one month the fund has earned a return of 3.83% as against the category average of 2.35%.The three-year and five-year returns are also more than the category average of 10.36% and 13.85%, respectively at 12.93% and 15.88%, respectively. The fund has 71.24% of its portfolio invested in equity comprising 86 stocks. This Rs 26,695 crore fund has 41.71% of the portfolio in the top three sectors, energy, finance and metals. The fund has traditionally featured a high equity allocation, hovering at well over 70%, and it continues to maintain it at 71.21% of the portfolio. In terms of style, the fund follows a blend of growth and value styles. On the debt portion, the fund does take aggressive duration calls. Throughout 2015-16, for instance, the average maturity was higher than 10 years. This has been toned down lately to four to five years as interest rates have headed lower. While the fund seeks to add to returns based on rate calls, it is very conservative about taking on credit risks. Sovereign and money-market securities dominate its portfolio. Traditionally, the equity portfolio has been mid-cap biased. But in the last one year, its weight has veered sharply towards large-cap stocks. The fund is now significantly overweight on large-caps relative to the category. The expense ratio of the fund is 1.95% while the portfolio turnover ratio is 234%. The fund is benchmarked against CRISIL Hybrid 35+65 Aggressive. Sankaran Naren, the veteran fund manager, manages this fund along with Manish Banthia and Atul Patel.

Tata Hybrid Equity Fund (erstwhile Tata Balanced Fund) Gem

This consistent fund has managed an impressive performance amid the swinging markets of the last seven years. It has been among the top ten funds in the balanced category in eight of the last ten years. This fund has handsomely outperformed the benchmark as well as the category over the last ten years. Ten year returns have been 17.18%. This compares very well with the category average of 14.99%. The one-year return of this Rs 4,822 crore fund is -4.17% as against the category average of -4.28%. Returns of 7.16% and 14.02% respectively, as against the category average of 10.36% and 13.85% during a three- and five-year period, reflects the fund's ability in stock selection. The fund did not fare well in the bear market of 2008, but it navigated 2011 quite well. The fund has a 75-25 equity-debt allocation, with its equity exposure consistently above 70%.  Large-cap stocks usually make up 60 to 70% of the exposure, but the proportion has been pegged up sharply to over 84% lately. The fund is now quite overweight on large-caps compared to its peers. The fund follows a growth at reasonable price (GARP) style of investing. It believes in buying businesses with good earnings growth prospects over the medium term and those which are run by quality managements. Each sector is played through a basket of five to eight companies. The top holdings are capped at 4 to 5% to reduce concentration and to capture more opportunities. The debt portion has allocations mainly to G-secs and AAA rated paper. The average maturity stood at about five years in January 2018. Finance, automobile and FMCG are the top three sectors. In terms of portfolio construction, the top three sectors comprise 46.15% of the portfolio mix. The fund has 29 stocks in the portfolio. The fund is benchmarked against CRISIL Hybrid 25+75 Aggressive Index. The portfolio turnover ratio of the fund is 204% and the expense ratio is 2.13%. The fund is managed by Murthy Nagarajan and Chandraprakash Padiyar.

Reliance Equity Hybrid Fund (erstwhile Reliance Regular Savings Fund)   Gem

Reliance Equity Hybrid Fund is an equity-oriented balanced fund with 73.81% in equity. The one-year return of this Rs 13,171 crore fund is -6.29% as against the category average of -4.28%. Returns of 9.57% and 15.15% respectively, as against the category average of 10.36% and 13.85% during a three- and five-year period, reflects the fund's ability in stock selection. 46.42% of the portfolio is in the top three sectors, finance, construction and energy. The fund has a very compact portfolio of 58 stocks. The fund is benchmarked against CRISIL Hybrid 35+65 Aggressive. The portfolio turnover ratio of the fund is 131% and the expense ratio is 1.97%. The fund is managed by Mr. Amit Tripathi and Mr Sanjay Parekh.

Canara Robeco Equity Hybrid Fund (erstwhile Canara Robeco Balanced Fund renamed as Canara Robeco Equity Debt Allocation Fund) Gem

Canara Robeco Equity Hybrid Fund is the oldest balanced fund that has exhibited smooth sailing across market cycles. The one-year return of the fund is 0.75% as against the category average of -4.28%. The fund’s three-year and five-year returns of 10.36% and 15.4% respectively are higher than the category average of 10.36% and 13.85% respectively. Canara Robeco Equity Hybrid Fund has 51 stocks in the portfolio. 38.74% of the portfolio is in the top three sectors, concentrated in finance, energy and construction sectors. The good performance of Canara Robeco Equity Hybrid Fund across market cycles is attributable to its bias towards safety and stability. This is reflected in the significant proportion of large-cap stocks in its portfolio. The fund is benchmarked against CRISIL Hybrid 35+65 Aggressive. The expense ratio of this Rs 1,883 crore fund is 2.41% with a portfolio turnover ratio of 394%. The fund is managed by Mr. Avnish Jain, Mr Shridatta Bhandwaldar and Mr. Krishna Sanghvi.