The domestic mutual fund investing community seems to like it plain and simple. You either find investors who opt for a plain vanilla income (debt) fund or a plain vanilla growth (equity) fund. With their persistent disregard for balanced funds, investors have once again been caught off-balance in more ways than one!

Leading balanced fund performers

Balanced Funds	NAV (Rs)	1-MTH	6-MTH	1-YR	INCEP.
ZURICH I PRUDENCE G	21.6	-4.3%	10.9%	18.7%	14.4%
CANPREMIUM	13.1	5.1%	7.5%	18.4%	17.9%
JM BALANCED G	16.0	-0.6%	6.2%	15.9%	12.7%
DUNDEE BAL D	7.4	-5.8%	5.8%	13.4%	-7.6%
ESCORTS BAL G	11.6	-4.1%	8.9%	12.2%	13.9%
FRANKLIN BAL G	9.7	-2.9%	7.4%	11.3%	-2.1%

(NAVs as on May 31, 2002. Returns over 1-Yr are annualized compounded)

Its noteworthy that even relatively small/mid-size funds have seen their balanced offerings performing exceedingly well. For instance, Escorts, Dundee and Canbank (Canpremium) may not be the most likely choice for investors, but they have outperformed some of their larger and more popular peers.

Leading equity fund performers

Equity Funds	NAV (Rs)	1-MTH	6-MTH	1-YR	INCEP.
RELIANCE VISION	22.0	3.0%	45.6%	43.0%	12.3%
BOINANZA EXCL G	9.8	-2.9%	27.2%	36.1%	2.2%
PIONEER I PRIMA FUND G	27.0	-2.1%	32.3%	35.0%	12.4%
GIC FORTUNE 94	6.6	-5.0%	30.4%	22.9%	-4.8%
ZURICH I EQUITY G	21.2	-6.3%	16.7%	17.7%	11.5%
BIRLA MNC G	28.7	-6.4%	10.8%	9.2%	15.1%

(NAVs as on May 31, 2002. Returns over 1-Yr are annualized compounded)

Equity funds may be the preferable option for aggressive investors. But look how equity fund investors stack up over the last 12 months (although you need to look at equity funds for longer than that for a truer picture). Equity funds have been the worse hit by persistent volatility in markets over the last 8-9 months and this is reflected in their NAV performance.

So why have balanced funds done better than equity funds, after all, they both invest in equities? Balanced funds have 40-50% of their assets in fixed income securities depending on the fund manager's investment strategy. So volatility in equity markets does not impact them as adversely it impacts equity funds that have 80-90% of their assets in stocks. Investors need to make note of this before choosing an equity fund over a balanced fund.

 

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