An increasing number of volatility-triggering factors such as uncertainty in general elections, falling rupee, high crude oil prices and earnings growth in selective companies could pull down corporate earnings, which can impact mutual fund returns. Hence, it would be a wise move to invest in balanced schemes as they protect the downside with exposure to relatively stable debt markets.
Among the best performing balanced schemes, Principal Hybrid Equity Fund has performed remarkably well by not only beating its benchmark index but also its peers in both long-term and shortterm periods. One of the key aspects of the scheme is its long legacy of 18 years. This shows the scheme has seen varied market cycles and going by its performance, with the exception of 2008, it has performed reasonably well.
On the equity side, the scheme’s fund managers PVK Mohan (managing the scheme for the past eight years) and Bekxy Kruiakose have followed a conscious strategy of investing in companies which not only have dominant market share but also have shown consistently superior performance based on the strength of their market share, distribution network, balance sheet, cash flows and diversified presence.
These aspects, to a large extent, provide stability in their financial performance. A few prominent companies in the scheme’s portfolio are Maruti Suzuki, Hindustan Unilever, NTPC and Reliance Industries. On the debt side, the scheme is invested in government securities which are rated ‘A’ and above — providing stability to the scheme’s performance. In the past threeyear and five-year periods, the scheme has returned 18% and 20% returns while its peers (average) have given 13% and 17% returns in the same period respectively.
