Looking for A Consistent Performer in The Balanced Fund Category? Go for DSP BlackRock Balanced Fund - Regular Plan - Growth

Looking for A Consistent Performer in The Balanced Fund Category? Go for DSP BlackRock Balanced Fund - Regular Plan - Growth

Feb 26, 2018

One of the best kinds of mutual funds for intermediate - term investors is the balanced fund. Balanced funds are also referred to as hybrid funds as they include both bonds and stocks. And they are called balanced because they try to strike a balance between the investments made in stocks and bonds. And this balance happens to be quite steady with about 60% of the corpus in stocks and the remaining 40% in bonds.

Although there are many benefits of investing in balanced funds, below we have dished out some of the most important ones. Check out -

  1. The asset allocation is strategic – For people who don’t know how much of their money should go into equity and how much in debt, can capitalise from balanced funds. When they invest in such funds, they expose themselves to both equity and debt benefits. Fund managers manage such funds in such a manner that the ideal portfolio composition never gets disturbed.
  2. Tax efficiency – Balanced funds are considered to be tax efficient. And that is why they are perfect for investors whose prime investment motto is tax saving.
  3. Low risk equity exposure – We all know that equities offer higher returns than debt funds. But because investing in pure equity involves a great deal of risk, people go for balanced funds. So, when you invest in balanced funds, the risks associated with equity doesn’t hamper you badly, and the returns you receive are less volatile.
  4. The factor of market capitalisation – So what do you prefer? Small and mid cap or large cap funds? No matter which out of these options you prefer, you can invest in it in a roundabout way by choosing your balanced fund accordingly. While some balanced funds have higher exposure to large cap companies, others are exposed more to mid and small cap companies. When you choose your balanced fund carefully, you receive the right kind of market capitalisation exposure.

The market is flooded with a range of products in the balanced fund category. But when it comes to choosing, you should consider consistency. Talking about consistency, the first name that deserves a mention is DSP BlackRock Balanced Fund - Regular Plan – Growth.

Now, let’s look at the performance of the DSP scheme since its inception.

In the first year of its advent, the scheme offered a return percentage of 20.6, whereas other comparable funds in the market offered only 18.75%. In the third year of the scheme’s inception, it marked a return of 11.55% against 8.87% return offered by other equity oriented balanced funds in the market. The fifth year of the scheme saw a return of 15.2%. Whereas in the same year, the return offered by other similar funds in the market stood at 14.3%. In the tenth year, the return offered by the scheme was 10.12% as opposed to 8.85% offered by other balanced funds in the market. So, this gives us the total since- launch return offered by the scheme which is 15.53%.

If we compare it with the market average i.e. 12.59%, we see that DSP outstrips all other equity oriented balanced funds by a margin of 2.94%.

Source: Swaraj Wealth Research

Now let’s evaluate the yearly performance of the scheme. In the bar graph given below, you see that the scheme outperformed other comparable funds in the market in all the years starting from 2012 to 2016, except 2013. Paying attention to the scheme’s very recent performance, you notice that it made a growth of 8.25% in the year 2016, which is good.

Source: Swaraj Wealth Research

If you are thinking of investing in this scheme taking the SIP route, then it would be valuable for you to look at how your return for a year would have been if you invested on 05-01-2017. Well, if you started investing an amount of INR 10000 monthly on the above date, then by 05-12-2017, you would have earned a profit of 15.12%. That means, the total amount invested i.e. INR 1200000 would have become INR 128092, earning you a profit of INR 8092.

Source: Swaraj Wealth Research

Also, if you look at the growth curve of the scheme, you see that it has been on a steady rise this year (2017).

If you think investing in a balanced fund can help you meet your financial goals, then DSP BlackRock Balanced Fund - Regular Plan - Growth is definitely a scheme worth making investment in. This scheme will definitely offer you the kind of returns you wish to earn.

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