Due to a sustained flow of liquidity, markets are touching new peaks. In such a situation, valuation could be a concern. To deal with this, retail investors may consider balanced schemes, which take exposure to equity and debt. Among balanced funds, L&T Prudence Scheme (Regular) stands out in comparison to its peers. The fund, managed by Soumendra Nath Lahiri, Shriram Ramanathan and Karan Desai, invests 65-75 per cent of its portfolio in equities and the rest in debt.
A large part (more than 50 per cent) of its equity portfolio is tilted towards large-sized companies, while the remaining part of its portfolio is invested in mid- and small-sized companies. On the debt side as well, the scheme is invested in AAA debt securities in addition to government securities, which caps the portfolio's downside in terms of fall in returns.
The fund, highly focused on value-oriented stocks, has generated 14.7 per cent and 19.5 per cent returns in the past three- and five-year periods, while the fund category has generated 12 per cent and 16 per cent returns during the same period. In the past six months, the scheme's fund managers bought in companies which are well-established, have lean balance sheets and a sizeable market share. Interestingly, these companies represent diverse themes, which provide strength to the portfolio.
