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
Over the last one year, most of the equity-dedicated mutual funds have generated phenomenal returns. In the same period, many debt funds have generated returns in single digits. In between these two categories, there lies a balanced advantage or dynamic asset allocation category that can invest in either debt or equity depending on the market condition. The idea behind such free movement is that it allows a fund manager the flexibility to take asset allocation calls and give good returns regardless of market movements.
Currently when the equity market is trading at a lofty valuation, there is always the risk of a sudden drop in the equity market. Balanced advantage funds are one category which if managed properly can help investors to arrest a deep cut in their portfolio. Edelweiss Balanced Advantage Fund is one of the best funds in this category that has generated excellent returns in the last three-year and five-year periods.
Even in the last one year the fund has generated return in excess of 31 per cent compared to category average of 21.86 per cent. The fund is currently well-suited for a volatile time as almost 18 per cent of the fund’s AUM is in cash, 9 per cent is in debt and 72 per cent is in equity. Even in the equity part, the fund holds more than 80 per cent in large-cap, which remains more stable in case of a volatile market. In terms of sectors, the fund is overweight on finan-cials and IT. The fund is well-diversified with 113 securities and has performed better than its category in the years 2011 and 2013 when the overall scenario of the market was not very good. Even for the quarter ending March 2020, the NAV of the fund fell by only 10 per cent. The fund is a good choice for an investor with moderate to low risk appeal and an investment horizon of at least one year.
