If you see my posts/comments, you can make out I support Balanced Funds. And today we’ll do a TATA Balanced Fund Review which is one of top balanced funds in India.
Why do I like Balanced Funds? Well, it is because retails investors (including me) seldom have discipline of proper asset allocation.
We’re swayed by greed and fear . We invest in markets tops and sell when markets bottom. So never money is made in the process.
However, balanced funds offer a good mix of Equity and Debt exposure. Also remember that Balance Funds have no tax for the debt part of portfolio when you sell.
A balanced fund is ideal for anyone who wants to maintain asset allocation discipline at all times. It instills discipline.
So let us now check out why TATA Balanced Fund has been one of topper among balanced funds.
Also read: 5 Best Balanced Funds in India
TATA Balanced Fund Review
TATA Balanced Fund was started in 1995 and since then has been a decent performer. One of the good performing mutual funds from TATA Mutual fund house.
The fund has performed really well under the new Fund Managers – Pradeep Gokhale and Akhil Mittal.
The fund currently manages more than Rs 4700+ crores. The NAV is Rs 166.5.
Entry Load – Nil
Exit Load – 1% if redeemed within 365 days.
Minimum Purchase – Rs 5000 and then multiples of Rs 1000.
TATA Balanced Fund does not have any tax saving benefit under Section 80C of Income Tax Act. It does not have any lock-in period as well.
Read about Top ELSS fund : Axis Long Term Equity Fund Review
TATA Balanced Fund – Returns and Performance
The fund has been a top performer in the Balanced Funds category. It has outperformed most of the funds in the short and long run. Below is a snapshot of the performance returns from TATA Balanced Fund.
A consistent SIP in the fund since inception would have generated a CAGR of 17% which is really good. I have given the 1,3,5 year annualized returns below.
I have made an effort to calculate the SIP returns for an approximate tenure of 5-6 years from year 2010 till now. Check below.
The performance of SIP is given below
|Monthly SIP||Rs 5000|
|Amount Invested||Rs 3,65,000|
|Final Value||Rs 5,81,999|
The fund has actually given impressive returns for a balanced fund. Even better than some pure equity funds.
Sector Allocation of TATA Balanced fund
The scheme has allocated funds across all sectors. The fund allocation to various sectors/ industries is as follows
|Banking & Finance||16%|
|Auto & Ancilliaries||5%|
|Engg & Cap Goods||5%|
|Food & Beverages||2%|
|Cement & Construction||7%|
|Services & Others||2%|
The allocation in-terms of asset classes and within that for equity class is
|Allocation by Market Cap|
|Allocation by Asset Class|
Now that we’ve seen the sector allocations and asset class allocation of TATA Balanced Fund, let us check the top holdings of the fund.
|Top 10 holdings|
|Top Debt holdings|
|Non Convertible Debentures||5.31%|
|Money Market or Liquid Funds||5.21%|
From the table, we can see that TATA Balanced Fund holds high quality which also have potential for future capital appreciation. Not to mention the amount allocated to high quality debt.
Risk Analysis review :
One can see that the turnover of the fund is not very high but it is not low either. A lower beta and turnover ratio would have been desirable. Also, constant change in Fund Managers is not a good sign.
However, despite all that the fund has managed above average returns which is really credit worthy. Below are some return ratios that help you compare the returns generated and risk taken.
|Portfolio Turnover in last 1 year||0.44 times or 44%|
You must already know that risk-adjusted returns is an important parameter. There is no point in generating average return by taking very high risk.
Who should invest and how?
TATA Balanced Fund is an ideal fund for people who are moderate risk takers. This way you can get inflation beating returns with little extra alpha returns.
The good quality stocks indicate that you will not lose much compared to high risk equity funds when the market corrects or collapses. The same holds good for the upside as well :).
As always, I encourage you to take the Direct Plan route to reduce expense ratio. You check out the fund details more here and invest directly.
So, we can see that this fund is an above average fund and one of best among balanced funds.
Do not think twice if you’re looking for a quality fund and want to invest in a balanced fund.,
Rating and Opinion:
Fund Governance – 4/5
Risk Management- 3.5/5
Growth prospects – 4/5
Growth prospects – 4.5/5
Overall rating – 4/5
Disclosure: I’m not SEBI registered analyst. I do not get paid commission for this review and is my personal opinion. I do not own TATA Balanced Fund units as of writing this article but certainly think it is a worthy mutual fund to consider.
Let me know what is your opinion on TATA Balanced Fund review or any doubts regarding it. Have you invested or plan to invest in it?