Mutual funds are subject to market risks. 2017 saw a spectacular run for both equities and mutual funds. SENSEX gained new highs and crossed barriers of not only 34,000 levels but also less expected 35,000 levels.

However, tides changed its turns in 2018. January saw a steady increase in both the SENSEX and the NIFTY benchmark indexes. However, post the budget of 2018 on February 1 the fall began.

In a short span of less than a week, the SENSEX fell by more than a 1000 points. Uncertainty and fear among investors hit its peak. This sparked off a large scale sell-off. Peoples screen turned reds faster than they could realize and fathom.

This uncertainty and market volatility still persist. Common retail investors are unsure as to what to do. The common question in the minds of investors is- how do they cope up with this market volatility?

Should they sell their investments to salvage what is remaining of their investments? Or should they wait for the market to recover to achieve their expected returns?

MARKET VOLATILITY

It is important to realize that volatility of the markets is as natural as changing of the seasons.

Common investors must realize that markets are bound to go up and down. However, what is important to realize is that such change is only temporary or short-lived.

In the long-run, all the volatility and the irregularity iron out. What is left behind is wealth creation for the investors.

History has it that the markets have hit lows as seen during the 2008-09 Global Financial Crisis. But let’s look at the markets with a long-term perspective, say 10 years.      

From the high levels of about 20,000; the SENSEX fell to lows of 8500 levels. However, notwithstanding the frequent irregularities, the market has steadily grown. It crossed not only the previous 20000 mark. But also achieved new highs of 30,000 and even more.

Learnings from this trend in the data is that investors should not try to time the market. In the long-run, the market will correct itself and thereafter give returns to its investors.

Disciplined investment with the help of tools such as Systematic Investment Plan and Systematic Transfer Plan may be a good way to earn returns from the market in the long run.

MUTUAL FUNDS TO DEAL WITH VOLATILITY

BALANCED FUNDS

Balanced funds can be used as a good measure to deal with market volatility. These funds invest in both debt and equity component of the market, which in turn helps in reducing the volatility of the portfolio.

balanced fund is a fund which combines a stock component, a bond component and sometimes even a money market component into a single portfolio.

These are also known as hybrid funds. These are preferred by investors looking for a mixture of safety, income, and modest capital appreciation.

These are broadly of two types:

  • Equity-oriented balanced funds: Major portion of fund portfolio consists of equities, at least 65%, and rest in debts. The aim here is to minimize risk on investment
  • Debt-oriented balanced funds: Major portion of fund portfolio consists of debt and rest in equity. The aim here is to increase return on investment.

Balanced funds provide to the investors safety from the market.

Recently, a new kind of balanced funds is launched and they are getting huge popularity. They are called balanced advantage funds.

The only difference is that they use derivatives to manage allocation asset allocation across debt and equity. They also take more flexibility on asset allocation percentages.

.Again, it’s can be easily achieved by using arbitrage funds along with large-cap equity and long-term debt fund.

By shifting allocation between equity and debt, the funds can be used according to the situation of the market. At times of market correction, debt becomes more preferable and vice-versa.

TOP BALANCED FUNDS

In this article, we curate a list of top balanced funds that investors can opt for to deal with market volatility while ensuring good returns for their investments.

Aditya Birla SunLife Balanced 95

Aditya Birla SunLife Balanced 95

Facts:

AUM ₹13,595 Cr
NAV ₹747.41
Expense Ratio 2.27%
Minimum SIP ₹1000
Return 1Y 13.47%
Return 3Y 9.28%
Return 5Y 17.39%

Review:

The investment objective of the scheme aims to generate long term growth of capital and current income from a portfolio of equity and fixed income securities.

With a fund size of over ₹ 10,000 crore, this 30+ year old fund has been one of the oldest, most credible and best balanced funds.

This moderately high risk fund has been given a 4 star rating by Groww.

The expense ratio of this fund is 2.27% which is a bit on the higher side. However, the returns for this fund constantly outperforms the benchmark index.

Assets under Management (AUM) of this fund is approximately ₹10,000 crores. The returns tend to decline if the fund size becomes excessively huge.

The funds’ assets are invested in mostly equity followed by debt and some investment in cash as well. Equity forms about 75% of the total AUM, thereby making the fund equity- oriented.

Large cap forms a major portion of the equity investments, carrying more than 60% weightage.

Company Sector
HDFC Bank Ltd Financial Services
Infosys Ltd. IT
ICICI Bank Ltd. Financial Services
ITC Ltd. Consumer Goods
Larsen & Tubro Ltd. Construction
8.13 GOI June 22 2045 Sovereign

Among the top priority sectors for this fund are financial services, consumer goods, Pharma, energy and automobile among others.

ICICI Prudential Balanced Advantage Fund

ICICI Prudential Balanced Advantage Fund

Facts:

AUM ₹24,228 Cr
NAV ₹33.2
Expense Ratio 2.23%
Minimum SIP ₹1000
Return 1Y 12.09%
Return 3Y 9.19%
Return 5Y 14.72%

Review:

The primary investment objective of the Wealth Optimiser Plan under the scheme is to seek to provide capital appreciation and income distribution to the investors by using equity derivatives strategies, arbitrage opportunities and pure equity investments.

With a fund size of over ₹ 20,000 crores, this 10-year-old fund has been one of the best balanced funds. This moderately risky fund has been given a 4-star rating by Groww.

The expense ratio of this fund is 2.23%. However, the returns for this fund constantly outperforms the benchmark index.

Assets under Management (AUM) of this fund is approximately ₹25,000 crores. The returns are usually influenced by the size of the AUM and returns tend to get lower once the AUM exceeds a certain amount.

The funds’ assets are invested in equity, debt as well as cash at a ratio of 38%, 24& and 38% respectively. Large-cap forms a major portion of the equity investments.

Company Sector
HDFC Bank Ltd Financial Services
Infosys Ltd. IT
ICICI Bank Ltd. Financial Services
Motherson Sumi Systems Ltd Automobile
Reliance Industries Ltd. (70D) Energy

Among the top priority sectors for this fund are financial services, consumer goods, and automobile among others.

DSP BlackRock Balanced Fund 

DSP BlackRock Balanced Fund

Facts:

AUM ₹6915 Cr
NAV ₹145.38
Expense Ratio 2.46%
Minimum SIP ₹500
Return 1Y 14.0%
Return 3Y 10.51%
Return 5Y 16.57%

Review:

The primary investment objective of this fund is to seek to generate long-term capital appreciation and current income from a portfolio constituted of equity and equity related securities as well as fixed income securities.

With a fund size of approximately ₹ 7,000 crore, this over 25-year-old fund has been one of the oldest and best performing balanced funds with superior returns. This moderately high risk fund has been given a 4- star rating by Groww.

The expense ratio of this fund is 2.46% which is a bit on the higher than other funds in the similar category. Additionally, the returns for this fund constantly outperforms the benchmark index.

The funds’ assets are invested in mostly equity followed by debt and some investment in cash as well. Equity forms a little more than 70% of the total AUM, thereby making the fund equity- oriented.

Large-cap forms a major portion of the equity investments, carrying more than 60% weightage, making the fund a stable one as regards returns.

Company Sector
HDFC Bank Ltd Financial Services
L&T Ltd. Construction
GAIL India Ltd. Energy
SBI Financial Services
Shree Cement Ltd. Cement

Among the top priority sectors for this fund are financial services and consumer goods. Followed by construction, automobile, energy and cement among others.

Reliance Regular Savings Fund Balanced

 Reliance Regular Savings Fund Balanced

Facts:

AUM ₹11,344 Cr
NAV ₹54.85
Expense Ratio 1.97%
Minimum SIP ₹100
Return 1Y 18.05%
Return 3Y 10.93%
Return 5Y 17.64%

Review:

The primary investment objective of this option is to generate consistent returns and appreciation of capital by investing in a mix of securities comprising of equity, equity-related instruments & fixed income instruments.

With a fund size of over ₹ 10,000 crore, this 10+-year-old fund has been one of the most profitable and best balanced funds. This moderately high-risk fund has been given a 5- star rating by Groww.

The expense ratio of this fund is 1.97% which is a bit lower than other funds in the similar category. Moreover, the returns for this fund constantly outperforms the benchmark index.

Assets under Management (AUM) of this fund is approximately ₹15,000 crores. The returns are usually influenced by the size of the AUM and returns tend to get lower once the AUM exceeds a certain amount.

The funds’ assets are invested in mostly equity followed by debt and some investment in cash as well. Equity forms about 70% of the total AUM, thereby making the fund equity- oriented.

Large-cap forms a major portion of the equity investments, carrying more than 80% weightage.

Company Sector
HDFC Bank Ltd Financial Services
Infosys Ltd. IT
ICICI Bank Ltd. Financial Services
Indian Oil Corporation Energy
Grasim Industries Ltd. Cement

Among the top priority sectors for this fund are financial services, consumer goods, cement, energy, metals, IT and automobile among others.

Principal Balanced Fund

Principal Balanced FundFacts:

AUM ₹871 Cr
NAV ₹75.2
Expense Ratio 2.54%
Minimum SIP ₹2000
Return 1Y 24.85%
Return 3Y 13.40%
Return 5Y 18.22%

Review:

The primary investment objective of this fund is to generate long-term capital appreciation and current income by investing in a portfolio of equity, equity-related securities and fixed income securities.

With a fund size of over ₹ 800 crore, this 8-year-old fund has been one of the best balanced funds with superior returns. This moderately high-risk fund has been given a 5- star rating by Groww.

The expense ratio of this fund is 2.54% which is a bit higher than other funds in the similar category. However, the returns for this fund constantly outperforms the benchmark index.

The funds’ assets are invested in mostly equity followed by debt and some investment i cash as well. Equity forms over 60% of the total AUM, thereby making the fund equity- oriented. Large cap forms a major portion of the equity investments, carrying more than 66% weightage.

Company Sector
HDFC Bank Ltd Financial Services
Itc Ltd. Consumer Goods
Infosys Ltd. IT
United Spirits Consumer Goods
Coal India Ltd. Metals

Among the top priority sectors for this fund are financial services and consumer goods. Followed by energy, metals, construction and automobile among others.

L&T India Prudence Fund 

Facts:

AUM ₹8959 Cr
NAV ₹26.073
Expense Ratio 1.99%
Minimum SIP ₹500
Return 1Y 16.01%
Return 3Y 10.23%
Return 5Y 18.96%

Review:

The primary investment objective of this fund is to seek to generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related securities and to generate reasonable returns through a portfolio of debt and money market instruments to help generating funds in the long term to save for the cost of children’s education.

With a fund size of approximately ₹ 9000 crore, this 7-year-old fund has been one of the best performing balanced funds with superior returns. This moderately risky fund has been given a 5- star rating by Groww.

The expense ratio of this fund is 1.99% which is a bit lower than other funds in the similar category. Additionally, the returns for this fund constantly outperforms the benchmark index.

The funds’ assets are invested in mostly equity followed by debt and some investment in cash as well. Equity forms a little less than 75% of the total AUM, thereby making the fund equity- oriented.

Large-cap forms a major portion of the equity investments, carrying more than 70% weightage, making the fund a stable one as regards returns.

Company Sector
HDFC Bank Ltd Financial Services
Itc Ltd. Consumer Goods
TCS Ltd. IT
The Ramco Cements Cements
L&T Ltd. Construction

Among the top priority sectors for this fund are financial services and construction. Followed by consumer goods, IT and automobile among others.

SBI Magnum Balanced Fund

Facts:

AUM ₹17,955 Cr
NAV ₹125.08
Expense Ratio 1.97%
Minimum SIP ₹500
Return 1Y 17.41%
Return 3Y 9.41%
Return 5Y 17.59%

Review:

The primary investment objective of this fund is to provide investors long-term capital appreciation along with the liquidity of an open-ended scheme by investing in a mix of debt and equity.

The scheme will invest in a diversified portfolio of equities of high growth companies and balance the risk through investing the rest in a relatively safe portfolio of debt.

With a fund size of approximately ₹ 18,000 crore, this over 30-year-old fund has been one of the oldest, most credible and best performing balanced funds with superior returns. This moderately risky fund has been given a 5- star rating by Groww.

The expense ratio of this fund is 1.97% which is a bit lower than other funds in the similar category. Additionally, the returns for this fund constantly outperforms the benchmark index.

The funds’ assets are invested in mostly equity followed by debt and some investment in cash as well. Equity forms a little less than 70% of the total AUM, thereby making the fund equity- oriented.

Large cap forms a major portion of the equity investments, carrying more than 60% weightage, making the fund a stable one as regards returns.

Company Sector
HDFC Bank Ltd Financial Services
Bharti Airtel Ltd. Telecom
TCS Ltd. IT
SBI Financial Services
Kotak Mahindra Bank Financial Services

Among the top priority sectors for this fund are financial services and IT. Followed by consumer goods, Pharma, IT and telecom among others.

LARGE CAP FUNDS

Large-cap funds refer to those funds which invest a larger proportion of corpus in companies with large market capitalisation.

Large-cap companies usually have capital worth 20,000 crores or more.

Since these companies are strong, reputable they are more stable as an investment alternative. They have the least risk and offer the best returns for that level of risk.

Such funds are suitable for investors who have a low-risk appetite and want stable returns.

For those investors who want to deal with this problem of volatility and have a higher risk appetite may opt for large-cap funds.

Large-cap funds are a bit riskier than balanced funds, however, the higher risks are compensated by higher returns.

Therefore, those investors who have a long time horizon of 5-7 years and are willing to take higher risks may deal with volatility by investing in large-cap funds. 

TOP LARGE CAP FUNDS 

SBI Bluechip Fund

SBI Bluechip Fund

Facts:

AUM ₹17,869 Cr
NAV ₹37.74
Expense Ratio 1.97%
Minimum SIP ₹500
Return 1Y 16.11%
Return 3Y 9.50%
Return 5Y 18.41%

Review:

The primary investment objective of this scheme is to provide investors with opportunities for long-term growth in capital through an active management of investments in a diversified basket of equity stocks of companies whose market capitalization is at least equal to or more than the least market capitalized stock of BSE 100 Index.

With a fund size of approximately ₹ 18,000 crore, this 10-year-old fund has been one of the best performing llarge-capfunds with superior returns. This moderately high risk fund has been given a 4- star rating by Groww.

The expense ratio of this fund is 1.97% which is almost at par as compared to other funds in the similar category. Additionally, the returns for this fund constantly outperforms the benchmark index in its 1Y, 3Y and 5Y returns.

This scheme invests 90% of its funds in equity, out of which 85% is invested in large cap.

Company Sector
HDFC Bank Ltd Financial Services
Larsen & Tubro Ltd. Construction
ITC Ltd. Consumer Goods
Mahindra & Mahindra Ltd. Automobile
SBI Financial Services
Hero Motor Corp Ltd. Automobile

Among the top priority sectors for this fund are financial services and automobile. Followed by consumer goods, Pharma, energy and construction among others.

Mirae Asset India Opportunities Fund

Mirae Asset India Opportunities FundFacts:

AUM ₹6,123 Cr
NAV ₹46.93
Expense Ratio 2.39%
Minimum SIP ₹1000
Return 1Y 22.13%
Return 3Y 12.32%
Return 5Y 21.54%

Review:

The primary investment objective of this scheme is to generate long term capital appreciation by capitalizing on potential investment opportunities through predominantly investing in equities, equity-related securities.

With a fund size of only ₹ 6,000 crore, this 10-year-old fund has been one of the best performing large-cap funds with superior returns. This moderately high-risk fund has been given a 5- star rating by Groww.

The expense ratio of this fund is 2.39% which is higher than some other funds in the similar category. Additionally, the returns for this fund constantly outperforms the benchmark index in its 1Y, 3Y and 5Y returns.

This scheme invests 97% of its funds in equity, out of which 85% is invested in large cap.

Company Sector
HDFC Bank Ltd Financial Services
Larsen & Tubro Ltd. Construction
Reliance Industries Energy
SBI Financial Services
Maruti Suzuki India Ltd. Automobile

Among the top priority sectors for this fund are financial services and automobile. Followed by consumer goods, metals, energy and construction among others.

Reliance Top 200 Fund

Reliance Top 200 Fund

Facts:

AUM ₹4149 Cr
NAV ₹32.44
Expense Ratio 1.98%
Minimum SIP ₹100
Return 1Y 20.87%
Return 3Y 8.72%
Return 5Y 18.64%

Review:

The primary investment objective of this scheme is to seek to generate long term capital appreciation by investing in equity and equity related instruments of companies whose market capitalization is within the range of highest & lowest market capitalization of BSE 200 Index.

The secondary objective is to generate consistent returns by investing in debt and money market securities.With a fund size of only ₹ 4,000 crore, this 10 year old fund has been one of the good performing llarge-capfunds with superior returns. This moderately high-risk fund has been given a 5- star rating by Groww.

The expense ratio of this fund is 1.98% which is at par as compared to some of the other funds in the similar category. Additionally, the returns for this fund constantly outperforms the benchmark index in its 1Y, 3Y, 5Y and 10Y returns.

This scheme invests 95% of its funds in equity, out of which 85% is invested in large cap.

Company Sector
HDFC Bank Ltd Financial Services
Larsen & Tubro Ltd. Construction
ITC Ltd. Consumer Goods
Tata Steel Ltd. Metals
SBI Financial Services
Infosys Ltd. IT

Among the top priority sectors for this fund are financial services and automobile. Followed by consumer goods, Pharma, energy and construction among others.

Happy investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww.