DSPBR Balanced Mutual Fund

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Investors can buy the units of DSPBR Balanced Fund, given its long-term track record in delivering reasonable returns. Over one-, three- and five-year timeframes, the fund has managed to better the performance of its benchmark - Crisil Balanced.

DSPBR Balanced has generated a compounded annual return of 20.90% over a five-year period, placing it among the top few funds in its category.

Being an equity-oriented balanced scheme (65-75% equity), the fund has been able to participate quite well in market rallies. But this also exposes the fund to risks during market declines as downside protection is not possible, especially when compared with a debt-oriented scheme. Despite this shortcoming, the fund`s track record over the last 10 years across market cycles has been quite steady.

DSPBR Balanced may be a suitable fund for investors with an average risk-appetite. Exposure through the SIP route may help combat volatility better. The fund`s return compares favourably with HDFC Prudence and Birla Sun Life 95. These funds too tend to under perform during steep market downswings.

Performance and strategy
During periods of market upswing, such as those witnessed in the second half of 2006, much of 2007 and in the prolonged rally that started in March 2009, the fund has managed to outperform the Crisil Balanced Index by 10-25 percentage points.

But during market corrections, in May-June 2006, early 2007 and 2008-09, the fund underperformed its benchmark.

DSPBR Balanced invests in midcap stocks (less than Rs 75 billion market capitalisation) to the tune of 15-30%, which enables it to participate in broader market rallies.

The fund had over 85 stocks during late 2007. This has been marginally trimmed, although over 70 stocks appeared in the portfolio on an average over the past one year. This reduces the concentration risk for the fund.

The debt portion of DSPBR Balanced has been low on the risk front; with investments only in AAA rated instruments. These include bonds and NCDs of institutions such as HDFC, LIC Housing Finance, Shriram Transport Finance and Sundaram Finance