Fund of Fortnight

This is our mutual fund recommendation. Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same. 

Reason for recommendation
A fall in interest rates seems to be imminent now and investing in balanced advantage funds (BAFs) during such times when there is also the overriding fear of recession would be a wise move due to their dynamic asset allocation strategy. BAFs adjust between equities and debt based on the market conditions. Hence, our choice of mutual fund in this issue is Baroda BNP Paribas Balanced Advantage Fund. This mutual fund has consistently outperformed its category average across various timeframes. In a six-month period, the fund has delivered 15.91 per cent, surpassing the category average of 14.01 per cent. Over the past year, the fund has returned 26.58 per cent, outperforming the category average of 25.25 per cent. In the three-year and five-year periods, the fund has achieved returns of 15.15 per cent and 19.34 per cent, respectively, both ahead of the category averages of 14.05 per cent and 15.89 per cent. The fund’s sectoral allocation demonstrates a wellbalanced approach, with significant exposure to financials (17.76 per cent), which provides stability and growth, especially in a growing economy. The energy sector accounts for 10.54 per cent of the portfolio, adding diversification and potential benefits from energy price fluctuations. Capital goods hold 8.04 per cent, positioning the fund well to benefit from infrastructure and industrial growth.

The fund’s top individual holdings are strong – industry-leading companies that contribute to its performance. Reliance Industries Ltd. holds the largest allocation at 4.29 per cent, providing exposure to diverse sectors including energy and telecommunications. Larsen and Toubro Ltd. at 3.85 per cent adds significant value with its robust presence in infrastructure. HDFC Bank Ltd. (3.76 per cent) and ICICI Bank Ltd. (3.69 per cent) further bolster the fund’s financial exposure, enhancing stability and growth potential.