A conservatively managed balanced fund, it has earned a four to five-star rating consistently. The fund invests 65 to 75 per cent of the portfolio in equities and the rest in debt. The allocation is maintained on a steady-state basis.
In keeping with a low risk taking philosophy, the equity portfolio usually constitutes large-caps to the extent of 50 per cent, but the relative allocation between market caps is tactically managed. Large-cap exposures have lately climbed to over 70 per cent. Stocks are selected by analysing a company's business model, financial parameters and business expectations.
The debt portion is managed for low volatility returns. This means maintaining a high credit quality portfolio, without aggressive duration calls. The fund manager analyses a host of factors, including the trajectory of inflation, interest-rate movement, growth, among other parameters of the Indian economy, as well as developments in global markets. The latest debt portfolio was parked mainly in sovereign and AAA rated corporate securities.
L&T India Prudence Fund returns over three and five years have beaten its benchmark by 3 to 6 percentage points and peers by about 1 to 2 percentage points. Due to its value orientation, the fund does not outperform its benchmark or peers on a year-to-year basis but has delivered if evaluated over longer time frames that allow contrarian calls to pay off. With the fund starting off in 2011, its performance is yet to be tested in a severe bear market.
L&T India Prudence Fund - The fund is a sound low-risk option in the balanced space.
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