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Market gloom hits balanced funds

Sep 20, 2000

Much like their growth counterparts, net asset values (NAVs) of balanced funds fell dramatically consequent to the market slump on news of rising crude prices. Even with a 60% (maximum 70%) exposure to equities, balanced fund NAVs have been hit about as hard as growth funds. One reason for this is of course the portfolio composition of growth and balanced funds, which have more or less the same stocks (read Infosys, Satyam, NIIT, Wipro, Zee Telefilms). So a fall in prices of these stocks affects growth and balanced funds equally and this explains why growth funds and balanced funds in the country mirror each other’s performances so closely.

Open-ended, balanced funds NAV
(Rs)
Last
week
Last
month
Last
year
Since
inception
BSE - 30 - -7.6% -1.0% -6.3% -
S&P CNX Nifty - -7.5% -1.2% -0.3% -
S&P CNX 500 - -9.0% -0.4% 0.5% -
Sun F&C Balanced (Gr) 8.7 -4.1% 5.1% 0.0% -18.4%
K Balance 10.4 -4.4% -0.1% 0.0% 5.2%
Dhanavikas (1) 8.3 -4.6% -0.7% -21.1% -2.4%
Dundee Balanced Fund (App) 8.5 -4.7% -2.8% 0.0% -3.5%
K P Balanced (Gr) 8.7 -5.4% 0.2% 0.0% -17.9%
JM Balanced Fund (Gr) 16.7 -5.5% 3.9% 13.5% 10.5%
Sundaram Balanced Fund (Gr) 9.8 -5.6% 0.6% 0.0% -3.5%
Birla Balance (Gr) 11.8 -5.6% 0.9% 0.0% 25.4%
Tata Young Citizens 10.9 -5.6% 0.4% 14.3% 18.7%
Zurich(I) Prudence (Gr) 19.3 -5.7% 0.0% 6.1% 16.4%
Pru ICICI Balanced (Gr) 9.9 -5.7% 3.6% 0.0% 1.4%
DSP ML Balanced (Gr) 10.9 -6.3% -0.5% -3.7% 7.0%
Alliance 1995 Fund (Gr) 56.2 -7.0% 3.4% 44.5% 39.5%
Tata Balanced 15.2 -7.2% 1.6% 20.6% 15.9%
Magnum Balanced Fund 15.5 -8.6% 7.4% 39.4% 23.9%

(The table shows only balanced funds that have fallen by over 4% in the last week)

The above table unfolds the misery of balanced funds subsequent to the hike in global crude prices. And speaking of misery, growth funds have fared even worse as highlighted by the table below.

Open-ended, diversified,
growth funds
NAV
(Rs)
Last
week
Last
month
Last
year
Since
inception
BSE - 30 - -7.6% -1.0% -6.3% -
S&P CNX Nifty - -7.5% -1.2% -0.3% -
S&P CNX 500 - -9.0% -0.4% 0.5% -
Mastergrowth 1993 18.4 -8.2% -0.4% -2.0% 9.4%
Pru ICICI Growth (Gr) 23.3 -8.2% 8.5% 19.9% 45.5%
K 30 18.6 -8.3% 0.7% 14.0% 39.5%
JM Equity Fund (Gr) 11.1 -8.3% 0.7% -10.6% 2.5%
K P Prima Fund (Gr) 21.8 -8.4% 2.3% -3.4% 12.2%
Birla Advantage Fund 40.1 -8.6% 0.3% 31.3% 34.6%
DSP ML Equity Fund 17.9 -8.6% -1.2% -2.7% 27.2%
Alliance Equity Fund (Gr) 37.8 -8.8% 5.3% 54.2% 89.6%
Sundaram Growth 13.8 -8.9% 2.0% 6.9% 22.3%
Tata Pure Equity 13.2 -9.1% 0.8% 27.7% 46.5%
Zurich (I) Top 200 15.2 -9.2% -1.6% -18.1% 16.9%
DSP ML Opportunities (Gr) 9.1 -9.9% 1.0% 0.0% 3.2%
IL&FS Gr & Val (Gr) 13.6 -10.4% -0.4% 0.0% 12.2%
ING Growth (Gr) 18.3 -11.0% 2.9% 46.1% 58.1%
Magnum Global Fund 11.7 -12.2% 3.0% -5.6% 4.8%
Magnum Equity Fund 15.3 -14.2% 8.7% 15.4% 16.3%

(The table shows only diversified growth funds that have fallen by over 7% in the last week)

The fixed income portion of balanced funds have failed to cheer fund managers and there is little respite for them with bond yields posting a rise, as a surge in crude prices have fuelled inflationary fears. The picture over the next few days for balanced (and growth) funds is unlikely to get any rosier.

Long term investors with balanced funds will find that exiting at this stage will serve little purpose and staying invested makes more sense given the fact that the fundamentals of companies (especially software, FMCG and pharma) continue to remain strong.

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