HDFC Balanced Advantage Fund has notched up a commendable double distinction – it is the first BAF to cross the coveted Rs. 1 lakh cr AuM milestone, and it has done this while retaining its No.1 position on 3 yr, 5 yr and 7 yr performance league tables.
A key and timely re-orientation of the fund from a PSU-heavy stance to a more neutral and broader diversified strategy helped the fund make the most of the PSU rally in FY24 and then avoid the steep correction thereafter in FY25, which enabled the fund to maintain its top quartile ranking in both years.
What also helped was timely asset allocation calls – reducing equity from 72% in August 24 to 49% ahead of correction in ensuing months and then loading up again into equity from 49% to 59% in Feb 25, just ahead of the rate cut cycle commencement, which lifted markets out of their correction.
Gopal is incrementally adding positions in consumer names– discretionary as well as staples and is cutting back on exposures in defense, power and PSU banks where he is taking profits after healthy rallies.
The world is seeing a lower earnings growth trajectory and so is India. We are used to seeing 15-18% earnings growth and FY25’s 4% growth was a disappointment in that context. While we will see better numbers going forward, we should not expect high teens growth numbers now – a low double digit number for FY26 is what we can reasonably expect.
Continuing tariff and trade uncertainties are likely to keep corporate capex muted in FY26, which puts more onus on Government capex to drive growth.
With bond yields coming down by 100 bps in recent months, equity market quickly re-rated upwards by 15% to account for lower discounting factor in calculating valuations. Going forward, don’t expect more re-rating –market will move only based on earnings growth.