Equity Debt ratio of Balanced Mutual Funds

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Equity-debt ratio of Balanced Mutual Funds

Analysis of asset-class exposure of 10 largest funds show thay have kept the ratio at 56-41

BALANCED funds, or hybrid funds as they are alternatively referred to as, have shown no inclination to jiggle their equity-debt mix in any significant way in recent months, as compared to a year ago. The largest ones among them have maintained around a 56-41 equity-debt ratio when looked at on the whole.

This is seen in an FC Reserch Bureau analysis of the asset-class exposure of 10 largest balanced funds in the latest July to September quarter, as compared to the same quarter of last year.

The 10 schemes analysed had the largest average assets under management (AUM) in the first half of current financial year (AprilSeptember), as per Capitaline NAV mutual fund database. Their aggregate average AUM of Rs 16,100 crore accounted for 78 per cent of the total average AUM of Rs 20,700 crore across all the 53 open-ended balanced funds in the database. The schemes comprise both equity-oriented and debt-oriented schemes.

In this year’s July-September quarter, on an average, the 10 schemes were collectively invested in equities to the extent of 57.50 per cent of their aggregate average AUM. Another 40.5 per cent was invested in debt securities, while cash and cash equivalents took up 1.8 per cent and gold exchange traded fund exposure took up 0.2 per cent.

In the same quarter last year, these same 10 schemes, based on the average collective AUM of that quarter, had an equity exposure of 54.8 per cent, a debt exposure of 42.8 per cent, and exposures of 2.0 per cent and 0.4 per cent in cash and gold ETF, respectively.

This meant there was a small rise of 2.7 percentage points in equity exposure and a small fall of 2.3 percentage points in debt exposure of the analysed balanced schemes. But this is to be expected since the equity market benchmarks were seen to be broadly rising in July-September quarter this year as compared to the same period last year.

Individually, the schemes’ exposure changes varied from the average result but not by much. HDFC Prudence Fund, the largest balanced fund, for instance, had an average of 75 per cent exposure in equities last year (July-September), while this year’s average was at around 74 per cent. The balance was predominantly in debt securities.

The same mutual fund’s another balanced scheme, HDFC Balanced Fund, also in the largest 10 list analysed, saw a slightly different trend. The equity exposure, which was about 66 per cent last year, had moved up to about 71 per cent this year.

UTI-CCP Balanced Fund, the second-largest balanced scheme in our analysed universe, saw no change in its 39 per cent equity exposure from last year's July-September quarter to the same quarter this year. The rest was almost in debt securities but where the components of debt exposure underwent significant changes. The schemes' exposure to government securities went up from about 7 per cent to 10 per cent, while the PSU bonds exposure went up from about 2.0 per cent to almost nil. The corporate non-convertible debenture exposure stayed mostly the same at around 46 per cent.

The other schemes in our largest 10 universe included Axis Triple Advantage Fund, Birla Sun Life '95 Fund, DSP BR Balanced Fund, Tata Balanced Fund, UTI Balanced Fund, UTI-Retirement Benefit Pension Plan and UTIUnit Linked Insurance Plan.

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