Since July 2008, when new fund managers under Canara Robeco took over, Canara Robeco Balanced has been transformed into a stable and conservative offering
This fund has a long and complicated history. It is the product of three balanced funds and two asset management companies - Canbank Mutual Fund (now Canara Robeco) and GIC Mutual Fund. In 2008, the fund was merged with Canara Robeco Balance II and the final entity has been named Canara Robeco Balanced. Due to the lack of continuity in management, it's tough to nail down this one's style. Also, since December 2007 there have been three fund manager changes with the current one taking over in July 2008, when Robeco took a stake in the AMC.
Historically, the fund has been a bit too bold. A 41 per cent allocation to just one sector, or a 20 per cent allocation to one single stock are two instances. Yet there have been times when the fund has moved to the other end of the spectrum.
There have been periods when the equity:debt allocation crossed the defined limits. October 2007 to January 2008 was one such period when the equity allocation averaged 81 per cent.
The risk was mitigated to a small extent by the heavy large-cap exposure.
Since July 2008, when the new fund managers under Canara Robeco took over, the fund has been transformed into a stable and conservative offering. The equity allocation, along with the large cap exposure began to dip instantly. No more bold exposures. So investors who want an equity exposure but are not aggressive will be happy here.
On the fixed income side, the fund manager takes no risk at all. In its past, it dabbled with low quality paper, but that is no longer the case.
On the equity side, the selection is more of bottom-up stock picking. "Our aim is to generate alpha on the way up and protect investors on the way down," says Anand Shah. He has a point. In the market crash of 2008, the fund was able to shield its investors better in three out of four quarters.
Last year the fund had barely any exposure to Autos and Metals, despite BSE Metals and BSE Auto being the top performing indices in 2009. The fund prematurely exited auto stocks in May 2009. "Across the board we had no exposure to Metals because we chose to play the domestic consumption. For a brief period Metals did better but in the long run, our stand holds. After the first correction itself we were vindicated," explains Shah.
Over the 5-year period ended July 31, 2010, the fund has delivered an annualised return of 22 per cent (category average: 16%).
