Balanced funds shine the most as markets scale new highs

The continuing rally on the Dalal Street has fund houses that hawk balanced funds laughing their way to the bank as the segment is amongst the fastest-growing in terms of net fund flows, as per Amfi data.

The funds saw a monthly inflows of Rs 7,458 crore in June, according to the data from the Association of Mutual Funds in India (AMFI).

More over, assets under management of balanced funds more than doubled to Rs 1.1 trillion as of June from Rs 46,000 crore a year ago, while folio counts jumped 55 per cent to 40,62,169 from 26,22,051 during the same period.

Folios are numbers designated for individual investor accounts, though one investor can have multiple accounts.

At present, 24 of the 42 MF houses have a balanced fund or two, which invest equally in equity and debt, in their bouquet. The size of balanced fund has more than doubled in the past one year, according to Sebi and Amfi data.

Birla Mutual Fund runs two schemes under the balanced fund category with a cumulative AUM of Rs 9,500 crore as of June, which more than doubled from Rs 4,500 crore a year ago.

"I hope the size of our balanced funds will increase to Rs 15,000 crore in a year and half from now," Birla MF chief executive A Balasubramnian, who also heads the industry lobby Amfi, said.

Sixth largest fund house UTI MF has seen its balanced fund AUM growing to Rs 3,000 crore from Rs 2,000 crore in the past one year.

"Our balanced funds AUM has already crossed Rs 3,000 crore from Rs 2,000 crore in past one year and we see it topping Rs 5,000 crore by next March," Suraj Kaeley, group president, sales & marketing at UTI MF told PTI.

The balanced funds are the fastest-growing category for them now, Kaeley said.

Market experts attribute the faster growth in this asset class to the ongoing market rally as this product invests both in equity and debt, providing a cushion to investors whenever the markets correct.

"Investors' bond with balanced funds may continue longer than expected as there are enough signal of a potential unwinding of positions in exchange traded emerging market debt instruments by foreign funds and a potential correction in the current build up in the equity linked saving schemes which are riding the market rally," Sanil Kumar, associate director at Geojit Financial Services, said.

Kotak AMC has also seen a good growth for its balanced fund.

"Our balanced fund AUM is Rs 1,800 crore currently and we are witnessing a monthly flows of Rs 100 crore into these funds and I believe this trend will continue," Kotak MF chief investment officer and head of products Laxmi Iyer said.