Mutual Fund - Can Balanced II -Growth Fund : Analysis

Can Balanced II -Growth

Name: - Can Balanced II -Growth Type: Open-Ended Balanced Fund Fund Manager: Mr. Umesh Kamath Inception Date: Feb 1, 1993 Balanced Funds are intended for those investors who want the returns of equity and stability of debt securities. One such scheme is Can Balanced II from Canbank Mutual Fund. Erstwhile GIC Balanced Fund the scheme was made open-ended in March 2000. It seeks to generate long-term capital appreciation and or income from a balanced portfolio of equity shares and fixed-income securities.

Performance as on August 01, 2006   Absolute Compound Annualized Scheme Name 6 Months 1 Year 3 Year 5 Year Since Inception Can Balanced II-G 6.74 46.26 40.10 29.42 9.63 Rank 3/24 1/24 2/22 5/21   Peer Group Average 1.6 22.93 31.52 26.07 17.16 Crisil Balanced Fund Index 4.67 22.53 24.17

The scheme has been a consistent performer with long term track record. Judicious asset allocation among equity and debt, select momentum picks and rally in large cap stocks has helped the scheme to top the charts evident from its rankings in last one year. It has pulled off exceptional one year return of 46.26% while category and benchmark posted meager 22.93% and 22.53% respectively during the same period. As a hybrid fund it has capitalized well on the soaring equity markets and volatile debt markets and its one year returns are even better than the returns delivered by average equity diversified funds at 28.02%. However its average allocation in equities at 70.7% in last one year period is on the higher side. Also the cash exposure of the scheme has gone up in last six months. Its assets base at Rs 69.82 crore as on June 2006 has witnessed a growth of 37.6% in past one year.

The scheme could invest upto 65% in equity and equity related instruments or fixed income securities, upto 40% in money market instruments and upto 20% in mutual fund units. As per its latest disclosed portfolio it has invested 53.33% of its assets in equities, 13.46% in debt instruments and rest in cash and equivalent. The scheme's portfolio is spread across 18 stocks. Top 5 holdings account for 34.10% of the equity portfolio. Siemens find top place in the portfolio and account for 10.65% of its equity assets. The fund focuses on growth strategy with major emphasis on large cap stocks Index heavyweights ITC, Reliance, BHEL and Tata Motors form the core part of the equity portfolio. However the fund does not hesitate to include midcap and smallcap stocks in its portfolio. This month it exited from the stock of Dr. Reddy laboratories. The fund seems to be bullish on Auto, Engineering and Diversified sector and has increased exposure in last one year. However it pared exposure in Metal and Electrical Sector and top 5 sectors as of now account for less than half of the equity portfolio. Key holdings in its portfolio such as BHEL, Siemens have appreciated significantly in last one year. The fund has cling to its top holdings in last one year while quickly moved out of others. Debt Portfolio carries low credit risk as 4.11% of its net assets in debt are represented by AAA rated instruments, 8.19% in LAAA followed by 13.14% in Sovereign instruments. The fund has invested 12.31% of its net debt assets in commercial bonds and 13.14% in T-Bills and 8.72% in securitised debt. This month new inclusions in debt segment was 7.4% GOI 2012 .Average maturity of the debt portfolio is 726 days and is higher than the category average of 696 days.

Minimum investment required to enter the scheme is Rs 5000 and offers both dividend and growth options. The scheme charges an entry load of 2% while an exit load of 1% is levied if redeemed within 1 year from the date of purchase. The scheme is benchmarked against Crisil Balanced Fund Index. Expense Ratio of the scheme as on May 31, 06 is 2.5% and is higher than the category average of 2.30%. Can Balanced Fund II 's stupendous performance and long term track record makes it suitable for those investors who have less appetite for risk and seeks to protect their capital through investments in Balanced Funds.