Investors would have made more money in mutual fund schemes that invest in a mix of stocks and debt rather than products betting only on blue chips in the last 10 years. Equity-oriented balanced funds, which invest 65% of their corpus in equities and the balance in debt instruments, have outperformed large-cap funds in periods of one, three, five and 10 years.
In the last three years, balanced funds have returned 15.65%, while large-cap schemes have fetched 13.13%. For the five-year period, returns from balanced funds were 9.75% against 6.7% from large-cap funds. The category has returned 9.7% in the last 10 years against 8.46% by large-cap funds, data from mutual fund tracker Value Research show
Equity-oriented balanced funds maintain their equity allocation between 65% and 75%. So when the markets go up, the equity allocation increases and the fund manager is forced to trim it. "These funds automatically sell highs and buys lows," says Pradeep Gokhale, senior fund manager, Tata Mutual Fund. Large-cap funds remain invested in equities only, and, hence, have underperformed.
