In­flow in bal­anced MFs rises four­fold in first half of FY18

Over­all as­sets un­der man­age­ment in­creased from ~84,000 crore to ~1.35 lakh crore


Bal­anced funds con­tinue to re­main the flavour of the sea­son. In­ter­est and in­flow into bal­anced funds have con­tin­ued to grow with the cat­e­gory see­ing a four­fold jump in in­flows in the first half of the cur­rent fi­nan­cial year.

Dur­ing April-Septem­ber, bal­anced funds, which in­vest in a mix of debt and eq­uity, wit­nessed in­flow of ~47,045 crore, against ~11,828 crore in the cor­re­spond­ing pe­riod last year. This sig­nif­i­cant in­cre­men­tal flow pushed the over­all as­sets un­der man­age­ment (AUM) of bal­anced funds to nearly ~1.35 lakh crore, against ~84,800 crore in March.

With mar­kets trad­ing at ex­pen­sive val­u­a­tions, many in­vestors are opt­ing for bal­anced schemes in or­der to avoid ex­ces­sive risk. Av­er­age monthly in­flows into bal­anced schemes have been around ~8,000 crore.

Ma­hesh Patil, co-chief in­vest­ment of­fi­cer (CIO), Aditya Birla Mu­tual Fund, said in the cur­rent sce­nario, in­vestors should look at bal­anced funds. “I would say if some­one has to put in a lump-sum amount, bal­anced funds with an in-built dy­namic as­set al­lo­ca­tion process should be pre­ferred.”

S Naren, CIO of ICICI Pru­den­tial Mu­tual Fund, has long been ad­vis­ing in­vestors to in­creas­ingly look for dy­namic as­set al­lo­ca­tion funds (bal­anced ad­van­tage funds).

Al­most all cat­e­gories of bal­anced funds (also called hy­brid funds) have of­fered rea­son­ably bet­ter re­turns. For in­stance, cat­e­gory av­er­age re­turns of bal­anced funds, which are eq­uity-ori­ented, were 12.2 per cent in the past one year. Sim­i­larly, funds with an as­set al­lo­ca­tion strat­egy also man­aged to pro­vide dou­ble-digit re­turns of 10.6 per cent dur­ing the same pe­riod.

At a time when bank de­posit re­turns have been sharply cut with re­cur­ring de­posits and

Cat­e­gory av­er­age re­turns of bal­anced funds were 12.2% in the past one year. Funds with as­set al­lo­ca­tion strat­e­gy­man­aged to pro­vide dou­ble-digit re­turns of 10.6% dur­ing the pe­riod

fixed de­posits of­fer­ing around 6.5 per cent, in­vestors want re­turns which are at least 200-300 ba­sis points more, with­out tak­ing too many risks.

Fund of­fi­cials say that at­trac­tion to­wards bal­anced funds are here to stay and go­ing for­ward it may only in­crease if banks cut down their de­posit rates fur­ther.

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