Tata Balanced Fund

The scheme seeks steady returns from debt along with growth from equities instruments. The likely equity to debt investment ratio is 70 to 30. Earlier known as Tata Equity Growth Fund, Tata Twin Balanced has been merged in to this fund.

This fund has managed to retain a four- or five-star rating in the choppy markets of the last seven years. It has beaten its benchmark and peers by handsome margins over one-, three- and five-year time frames. A solid performer, it has been among the top ten funds in the balanced category in eight of the last ten years.

Strategy: The fund retains a roughly 75:25 equity-debt allocation. The fund sticks to the growth-at-reasonable-price approach (GARP) for stock selection. The fund mainly buys and holds stocks where the underlying quality of business is high. The fund does not take market calls and ensures top exposures do not exceed 4-4.5 per cent each of assets. This makes for a rather large number of equity holdings, around 60-65 stocks. This splintered approach reduces risks as the fund isn't too reliant on its individual calls to score well in a rising market. But it can prevent outsize gains in a trending market too. The fixed income portion has high allocations to gilts and AAA-rated corporate bonds. Returns are managed through duration calls rather than credit risk.

Performance: The fund's one-year return of 59.8 per cent, three-year return of 27 per cent and five-year return of 18.1 per cent place it among the top funds in the balanced category. The fund has outperformed its category by a good 16.5 per cent, 7 per cent and 4.3 per cent in each of these time frames. The ten-year return of 19.1 per cent compares well even to pure equity funds. Never a poor performer, the fund has improved its place in the rankings steadily since 2011.

What we don't like: The fund has seen a fair bit of manager shuffle with four manager changes in the last six years.

Why invest? The fund delivers category outperformance without taking high risks either in the equity or debt.