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Balanced Funds – Worst of both worlds

Aug 8, 2000

Equity markets continue to remain lackluster. The gilt markets are also going through some depressing times subsequent to the rate hike effected by the RBI last month. So balanced funds are facing the worst of both the worlds. Balanced fund managers are going through rough times, and no one can blame them. With the progressive decline in stock prices and rising gilt yields (after RBI’s move to harden rates), fund managers don’t know where else to invest to soften the fall in their net asset values (NAVs)

A study conducted by personalfn.com revealed that only 3 balanced funds (all from LIC MF) were in positive territory over the last week, with all other funds giving negative returns. And the picture over the last month isn’t any brighter. The same three funds posted a rise in NAVs over the last month, with all other funds witnessing an erosion in NAVs.

Open-ended, Balanced Funds NAV
(Rs)
Last
week
Last
month
Last
year
Since
inception
Dhanavidya 12.5 1.7% 2.4% -22.4% 2.6%
Dhanaraksha 1989 10.3 1.2% 2.5% 5.6% 4.7%
Dhanasahayog C (Gr) 18.6 0.8% 1.6% -20.5% 4.3%
PNB Balanced Growth 13.4 -1.1% -5.8% 20.9% 25.3%
Dhanavikas (1) 8.1 -1.3% -11.8% -20.7% -2.8%
Dundee Balanced Fund (App) 8.3 -1.5% -9.2% 0.0% -5.6%
Canpremium 11.7 -1.5% -8.3% 8.8% 14.4%
JM Balanced Fund (Gr) 16.0 -1.8% -8.7% 14.4% 9.9%
K Balance 10.0 -2.1% -9.3% 0.0% 1.3%
Sundaram Balanced 9.6 -2.5% -8.1% 0.0% -5.7%
Sundaram Balanced Fund (Gr) 9.6 -2.5% -8.1% 0.0% -5.7%
Unit Scheme-1995 (Inc) 137.4 -2.6% -9.9% 32.3% 19.2%
Cantriple 18.6 -3.1% -12.7% -1.5% 4.8%
DSP ML Balanced (Gr) 10.4 -3.1% -12.6% -4.4% 3.7%
Canganga 10.5 -3.1% -13.5% -4.6% 2.2%
K P Balanced (Gr) 8.4 -3.2% -10.8% 0.0% -20.9%
Tata Young Citizens 10.4 -3.2% -10.8% 13.4% 18.0%
Unit Scheme-1995 (Gr) 166.4 -3.4% -11.7% 37.4% 20.1%
Pru ICICI Balanced (Gr) 9.2 -3.5% -11.4% 0.0% -5.8%
Zurich(I) Prudence (Gr) 18.5 -3.6% -11.2% 12.2% 15.9%
Sun F&C Balanced (Gr) 8.0 -3.6% -13.0% 0.0% -24.5%
Tata Balanced 14.0 -5.3% -14.4% 21.1% 14.3%
Birla Balance (Gr) 10.7 -5.4% -15.3% 0.0% 14.0%
Alliance 1995 Fund (Gr) 50.1 -5.9% -16.2% 50.0% 37.5%
ING Balanced (Cum) 8.9 -6.5% -17.1% 0.0% -6.7%
Magnum Balanced Fund 13.8 -7.0% -19.8% 45.4% 21.5%

So where do we go from here? The answer to this question will unravel over the weeks. But from where we stand, no one has anything positive to say about equity markets, in the near term and bearish sentiments are likely to persist. As far as interest rates go, the consensus seems to be that the rate hike will be rolled back. So this may put a little smile on the faces of fund managers, but it will be the mood in equity markets that will decide how long the smile stays there.


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