The fund seeks to achieve long-term capital appreciation and current income from a balanced portfolio with a target allocation of 60% equity, 40% debt and money market securities
This fund (earlier called Alliance 95) is one of the oldest balanced funds. It has a track record of beating the indices in nine of the last ten years and its peers in eight out of ten years. The fund has outperformed its benchmark by 8 per cent in the last three years and by 5.6 per cent in the last five years on an annualised basis.
Strategy: The fund usually parks 65-75 per cent of the portfolio in equities with the balance in debt. The equity portion (at 73 per cent in end February 2015) tends to be multi-cap. The fixed income portion is managed for higher yields rather than duration calls, with a mix of gilts, corporate bonds and money market securities. The current modified duration is 3.9 years, with a yield to maturity of 8.68 per cent. The fund practises a dynamic allocation model for equities within the available leeway. The equity allocation was kept low from 2011 until November 2013 and has since climbed as valuations became attractive. According to February data, the fund's equity portion was overweight in financial, technology, automobile and healthcare sectors.
Performance: Its outperformance has been particularly large in the last one year, with the returns at 50.8 per cent. This is well ahead of the benchmark return of 27 per cent and the peer group return of 43.3 per cent.
The fund's tendency to rebalance the equity-debt mix based on markets and the flexi-cap approach have contributed not just to high returns but also to low-risk levels in the fund. On the debt portion too, risks are contained through moderate duration.
What we don't like: The fund has high levels of equity allocation in the current market, which could expose it to downside during a correction.
Why invest? Actively managed debt as well equity portions make this a good fund for an investor who would like to put his asset allocation on autopilot.
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