- Editor Rating
- Rated 3.5 stars
- Very Good
- Tata Balanced Fund
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Tata Balanced Fund is a scheme that aims for an optimal mix of capital growth and income sources via a diversified portfolio made up of debt and equity investments.
It seeks growth from equity and equity linked securities along with steady safe returns from debt, thereby optimizing the portfolio returns while simultaneously managing unpredictability and volatility. The ratio of equity to debt is usually 70 to 30. The combination of debt and equity instruments is actively managed by the fund as pertthe current market conditions and future outlook.
Presented below is a comprehensive review of this balanced fund which will provide you with all the required information that you need to make a better choice about whether to buy, sell, or hold this fund.
Basic costs and other information
Tata Balanced Fund was launched on October 08, 1995. It has thus been in the investment business for over 19 years and remained a successful fund. As of June 30, 2017, this equity-focused fund has assets of INR 6,313 crores. The minimum required investment for lump sum investment route is INR 5,000, while it is INR 500 in case of SIP or Systematic Investment Planning method.
The expense ratio as of 31st May 2017 is 2.06 percent. If investors redeem their fund investment within a period of one year or 365 days of holding it, then the exit load is 1%.
Pradeep Gokhale has been the fund manager since April 2016. Murthy Nagarajan joined him exactly a year later.
Pradeep Gokhale has a B.com (H) degree. He is also a CFA and a CA. He joined Tata AMC in 2004. Before that he worked for Credit Analysis and Research Ltd. Other funds managed by him include Tata Banking and Financial Services Fund – Regular Plan; Tata Ethical Fund – Regular Plan; and Tata Digital India Fund – Regular Plan
Murthy Nagarajan has an M.Com degree. He also has a PGPMS and ICWA. He previously worked for Mirae Asset Global Investment India Ltd. and Quantum AMC. Other funds managed by him include Tata Medium Term Fund – Regular Plan; Tata Retirement Savings Fund – Conservative Plan/ Moderate Plan/ Progressive Plan – Regular Plan; Tata Regular Saving Equity Fund – Regular Plan; and Tata Short Term Bond Fund – Regular Plan.
Allocation of the fund
As of 30th June 2017, the fund’s allocation stands as 72.92 percent in equities, 16.29% in debt, 10.33% in Cash/Call, and 0.39% in money market.
As of 30th June 2017, the top 6 sectors that the fund’s portfolio focuses on include Banking/Finance (22.49%), Automotive (6.61%), Engineering (5.68%), Pharmaceuticals (5.34%), Technology (5.23%), and Oil & Gas (5.05%)
As of 30th June 2017, the top 6 stocks that make up the fund portfolio include HDFC Bank (5.23%), ICICI Bank (4.98%), ITC (3.20%), Power Grid Corp (2.73%), Reliance (2.62%), and HCL Tech (2.52%).
As of July 10, 2017, Tata Balanced Fund has produced a 13.47 percent return per annum on investment in the last 10-year period. This shows that the fund beat the category average of 10.76 percent for the same period. From the time of launch the fund has delivered 16.41 percent per annum returns.
In the past 1, 3, and 5 years, the fund has shown 13.68, 14.41, and 17.90 percent returns per annum. Thus the 5-year returns of the fund are nearly 2% points better than the category returns. On a 3-year period, the outperformance margins of the fund vis-à-vis the category is marginally better.
If the topmost holdings are taken into consideration, then it can be said that the Tata Balanced Fund heavily leans towards the banking and finance sector. As per data of the past 3 years, the fund’s standard deviation, i.e., the volatility of the returns of the fund vis-à-vis its average, is 10.59% as of 30th June 2017. This is higher than the category average which is 9.66% for the same period.
When the returns of Tata Balanced Fund are compared with its peers during the past 5 year period, then at 17.90 percent returns it has not done as well as other similar funds like Birla Sun Life Balanced ’95 Fund (18.14%), HDFC Balanced Fund (18.95%), ICICI Prudential Balanced Fund (19.51%), and SBI Magnum Balanced Fund (19.09%). When looking at the fund’s returns from a 3-year perspective, then the returns of other funds in the category are comparable or marginally better than Tata Balanced Fund returns of 14.41%.
Tata Balanced Fund has consistently given a solid performance since the time of its launch. Its performance has not wavered even amidst the volatile markets of the past 7 years. It also managed to retain a 5 or 4 star rating all through this period of unpredictable markets. Over the last ten years, this impressive fund has continued to feature in the list of the top five balanced funds in the country.
The equity to debt investment ratio of the fund’s portfolio is usually 75 to 25. About 60 percent of the equity and equity linked part of the portfolio is usually comprised of large cap stocks, while the rest are mostly made up of investments in mid caps. The debt section of the portfolio manages the returns via higher duration instead of credit risk.
The fund follows the GARP or growth-at-reasonable-price method when selecting stocks. Each sector undergoes across a basket consisting of 5 to 8 companies. The cap for the top holdings in the fund is 4 to 5 percent; this helps decrease concentration and avail of extra opportunities. The allocation of debt is mostly towards quality commercial paper and G-secs.
The 5 and 3 year returns of the fund have beaten the category returns by 5% and the benchmark by 8 to 10 percentage points. The 15 percent returns over the last 10 year period are comparable to funds made of pure equity portfolio. The outperformance margins have however declined in the past one year.
Should I sell, buy, or hold?
Tata Balanced Fund was the top performing fund for the past many years. the fund has been struggling since last one year after the change in fund management team. Its recommended to hold existing investment and avoid fresh investment.
Excellent Fund Size
Excellent Fund House
Low Expense Ratio
Average Fund Manager
Average Performance Consistency