Balanced Mutual Fund Portfolio for Moderate Risk Investors
Let's continue with our series of mutual fund portfolios for investors with different risk appetite, where in the previous session we discussed a mutual fund portfolio for aggressive investors. Today, we will discuss a balanced portfolio for investors with moderate risk appetite and high growth expectations.
Now, to provide a balanced portfolio, such categories have been chosen that can provide a stable and high growth to investors. Have a look at the step by step breakdown of the portfolio, and see if it matches with your own investment style and preferences.
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Portfolio Objective
Knowing the objective of the portfolio is really important as it helps in matching the investment goal of the portfolio with our own and experiencing a hassle-free growth. This portfolio follows the objective of providing a moderate to high growth to investors by investing in mutual funds across different asset classes. With the help of the below table, you can see what allocation has been given to schemes from different categories.
| Asset Class | Category | Allocation | Total Allocation |
|---|---|---|---|
| Equity | Multi Cap | 30% | 60% |
| Large Cap | 30% | ||
| Debt | Low Duration | 20% | 20% |
| Hybrid | Aggressive Hybrid | 20% | 20% |
Here, you can see that the highest allocation (60%) has been given to the equity schemes, and the categories that are chosen for the portfolio are two of the most stable performers of the equity space. In the debt space, a low duration scheme has been chosen, so that in addition to stability, liquidity can also be provided to the portfolio. At last, 20% allocation has been given to an aggressive hybrid fund, as they invest in equity as well as debt space, so will provide the portfolio a combination of stability as well as growth. Let’s move to the fund selection.
Fund Selection
| Scheme Name | Category | Returns (As on Jan 17, 2019) | ||
|---|---|---|---|---|
| 3 Years | 5 Years | 10 Years | ||
| Mirae Asset India Equity Fund (G) | Equity: Multi Cap | 16.64% | 19.00% | 18.16% |
| Reliance Large Cap Fund (G) | Equity: Large Cap | 15.33% | 17.78% | 17.72% |
| Franklin India Low Duration Fund (G) | Debt: Low Duration | 8.85% | 9.28% | - |
| DSP Equity & Bond Fund (G) | Hybrid: Aggressive | 10.85% | 15.08% | 14.94% |
Mirae Asset India Equity Fund (G)
Mirae Asset India Equity Fund is one of the top performers of the multi cap category and over the years has always been ahead of the benchmark as well as category returns. This scheme has the flexibility to invest across the market caps, thus shows stable performance in the market upsides as well as downsides. Now, the two factors that make this scheme a perfect choice for this portfolio are its risk to reward ratio, which is best in the category and the growth-oriented portfolio, which is necessary for maintaining the stability in the portfolio.
Reliance Large Cap Fund (G)
Reliance Large Cap Fund is also a top performer in its respective category. This large cap fund follows an aggressive style of investing which allows it to generate very high returns during the market upside, and with its optimal strategies, it also manages to cap the losses greatly during the market downside. In the long term, it will play a great role in providing high growth.
Franklin India Low Duration Fund (G)
This debt scheme has maintained the position in the past 7 years and all the credit for that goes to its optimal management and investments in moderate to low credit quality instruments. In the past 3, 5, and 7 years, (as on Jan 17, 2018) it has provided an annual average return of 8.85%, 9.28%, and 9.44%, respectively. This shows that even after being a debt scheme, Franklin India Low Duration Fund can provide a high growth to investors and that too with a spectacular consistency.
DSP Equity & Bond Fund (G)
DSP Equity & Bond Fund has been a stable performer from the start and has always provided investors with risk-adjusted returns. The scheme follows the growth-oriented stock picking style and in the debt space, it invests in instruments with high risk quality, which further reduces the risk associated. It will play a great role in decreasing the overall risk associated with the portfolio.
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Performance History
The best thing to check the consistency of a fund is its past performance. Now, it may not tell us about future performance but is very important in checking the consistency of a scheme or portfolio. Have a look:
| 1 Year | |||||
|---|---|---|---|---|---|
| Maximum | Minimum | STDEV | Absolute Avg. | Annualized Avg. | |
| Benchmark: CRISIL Hybrid 25+75-Aggressive Index | 48.10% | -17.02% | 11.83% | 12.95% | 12.95% |
| ICICI Pru Bluechip Fund | 61.30% | -19.03% | 15.27% | 15.59% | 15.59% |
| Mirae Asset India Equity Fund | 79.93% | -18.01% | 18.93% | 18.91% | 18.91% |
| DSP Equity & Bond Fund | 59.33% | -15.62% | 15.61% | 13.74% | 13.74% |
| Franklin India Low Duration Fund | 11.10% | 6.83% | 0.95% | 9.68% | 9.68% |
| Portfolio | 55.62% | -10.95% | 13.27% | 15.03% | 15.03% |
| 3 Year | |||||
|---|---|---|---|---|---|
| Maximum | Minimum | STDEV | Absolute Avg. | Annualized Avg. | |
| Benchmark: CRISIL Hybrid 25+75-Aggressive Index | 85.18% | 9.12% | 14.03% | 46.93% | 15.64% |
| ICICI Pru Bluechip Fund | 109.96% | 17.20% | 19.57% | 57.67% | 19.22% |
| Mirae Asset India Equity Fund | 134.27% | 16.48% | 25.80% | 74.34% | 24.78% |
| DSP Equity & Bond Fund | 107.22% | 2.56% | 21.84% | 54.60% | 18.20% |
| Franklin India Low Duration Fund | 34.99% | 28.73% | 1.54% | 32.72% | 10.91% |
| Portfolio | 97.67% | 17.35% | 17.59% | 57.07% | 19.02% |
| 5 Year | |||||
|---|---|---|---|---|---|
| Maximum | Minimum | STDEV | Absolute Avg. | Annualized Avg. | |
| Benchmark: CRISIL Hybrid 25+75-Aggressive Index | 116.67% | 32.78% | 16.90% | 89.17% | 17.83% |
| ICICI Pru Bluechip Fund | 148.01% | 44.77% | 21.05% | 112.03% | 22.41% |
| Mirae Asset India Equity Fund | 194.74% | 59.27% | 28.62% | 148.85% | 29.77% |
| DSP Equity & Bond Fund | 131.78% | 41.65% | 19.10% | 102.77% | 20.55% |
| Franklin India Low Duration Fund | 62.68% | 57.19% | 1.69% | 60.23% | 12.05% |
| Portfolio | 140.28% | 51.87% | 18.50% | 110.87% | 22.17% |
| 7 Year | |||||
|---|---|---|---|---|---|
| Maximum | Minimum | STDEV | Absolute Avg. | Annualized Avg. | |
| Benchmark: CRISIL Hybrid 25+75-Aggressive Index | 140.81% | 97.65% | 8.81% | 119.06% | 17.01% |
| ICICI Pru Bluechip Fund | 175.46% | 131.76% | 9.54% | 151.41% | 21.63% |
| Mirae Asset India Equity Fund | 231.80% | 169.97% | 12.64% | 196.18% | 28.03% |
| DSP Equity & Bond Fund | 138.70% | 107.70% | 7.50% | 123.04% | 17.58% |
| Franklin India Low Duration Fund | 93.64% | 89.56% | 1.09% | 91.20% | 13.03% |
| Portfolio | 166.88% | 131.20% | 7.49% | 147.13% | 21.02% |
With the help of the above tables, you can see that at every instance the portfolio returns have been ahead of the benchmark returns, and as the tenure is increasing, so is the margin. These tables show how good the track record of the portfolio is, and looking at the schemes right now, similar performance can be expected in the future.
So, if you are a moderate risk investor, then start your investment in this moderate risk balanced portfolio now to enjoy a spectacular growth in the long term. In case of any query, you can either contact the experts or can also submit them in the form provided below. Also, for a detailed explanation of the portfolio, you can watch the above mentioned video.
