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Markets prop up balanced funds

Aug 23, 2000

The recent surge in equity markets has propped up the net asset values (NAVs) of balanced funds. The rally (if you can call it) in equity markets has brought a sharp turnaround in the fortunes of balanced funds. Not so long ago, balanced funds were still recovering from the double whammy of an interest rate hike and indifferent equity markets. But that seems to have changed over the past few days.

The BSE Sensex has rallied by close to 170 points from 4,293 (on 17th August) to 4,462 points (on 22nd August). This has pushed up the equity portfolio of balanced funds, and the NAVs have appreciated significantly over last week.

Open-ended, Balanced FundsNAV
S&P CNX 50-5.3%5.3%20.4%-
S&P CNX 500--3.5%0.0%0.3%-
ING Balanced (Cum)10.17.0%2.9%0.0%6.5%
Unit Scheme-1995 (Gr)180.26.7%0.7%50.3%22.1%
Birla Balance (Gr)11.86.0%1.6%0.0%26.0%
Alliance 1995 Fund (Gr)55.25.3%1.3%50.2%39.6%
Tata Balanced 15.05.2%-3.1%24.8%15.8%
Magnum Balanced Fund14.45.0%-10.4%39.0%22.5%
Unit Scheme-1995 (Inc)145.75.0%0.6%41.1%20.6%
K P Balanced (Gr)8.94.2%-1.6%0.0%-16.9%
Zurich(I) Prudence (Gr)19.64.2%0.2%8.7%16.8%
Dundee Balanced Fund (App)8.74.2%1.6%0.0%-0.7%
(The above table only shows balanced funds that have appreciated by over 4.0% in the last week)

As is apparent from the above table, a few balanced funds have even outperformed the popular indices over last week. But most of the balanced funds in our sample continue to paint a sorry picture over last month. This seems to indicate that the rally in equity markets would have to be sustained for longer than 3 days for there to be some significant growth in balanced fund NAVs over the longer duration.

The interest rate hike if and when it is rolled back, will likewise prop up the fixed income component of balanced funds and will contribute to growth.

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