ICICI Prudential Balanced Fund: Best performing Balanced Fund in the last 5 years

Jul 26, 2017 by Dwaipayan Bose

Balanced funds have at least 65% asset allocation in equity or equity related securities and the remaining portion in fixed income securities. Fixed income (or debt) as an asset class is subject to less price volatility relative to equity and therefore, balanced funds have a moderate risk profile compared to stocks or equity mutual funds. As such these funds are ideal long term investment products for new investors and investors who do not have high risk appetites.
Launched in 1999, ICICI Prudential Balanced Fund is a very popular product in this category and is the best performing balanced fund in the last 5 years (please see Top performing Balanced Funds in our MF Research Section). Over the last 5 years, ICICI Prudential Balanced Fund gave more than 20% annualized returns. The Assets under Management of this fund has skyrocketed in the last couple of years, on the back of its strong performance and now stands at over Rs 14,200 Crores. The expense ratio of the regular plan of this scheme is 2.25%.
The asset management company, ICICI Prudential is the largest mutual fund house in India. Mutual Funds from the ICICI Prudential stable are amongst the top performers across several mutual fund categories. The fund managers of this scheme are Atul Patel, Manish Banthia and Sankaran Naren. The scheme is open for subscription for growth, yearly dividend, half yearly dividend and monthly dividend options.
ICICI Prudential Balanced Fund has given over 15% compounded annual returns since inception. The performance over the last 5 years is truly exceptional. The chart below shows the trailing returns of ICICI Prudential Balanced Fund versus the Balanced Fund category across different time-scales.

 The chart below shows the annual returns of ICICI Prudential Balanced Fund versus the product category in the last 5 years.

 You can see that ICICI Prudential Balanced Fund outperformed the category in all years except 2015. The chart below shows the NAV growth of this scheme over the last 5 years.

Rolling Returns
The 3 year rolling returns chart shows why ICICI Prudential Balanced Fund is such a strong performer. The chart below shows the 3 year rolling returns of the fund versus the balanced fund category over the last 5 years.

  With a cumulative investment of just Rs 3 lakhs you could have accumulated a corpus of almost Rs 5 lakhs in the last 5 years (a profit of nearly Rs 2 lakhs). The SIP return (XIRR) of ICICI Prudential Balanced Fund in the last 5 years was more than 19%.
Dividend Payout Track Record
ICICI Prudential Balanced Fund has an excellent dividend payout track record. For the last 10 years the fund has paid dividends every year.

he average historical dividend yield has been around 8%. From 2015 ICICI Prudential Balanced Fund started paying monthly dividends. The old Annual Dividend Option of the fund was renamed Monthly Dividend Option in December 2015. The table below shows the monthly dividends paid by the fund over the The annual dividend yield of the monthly dividend option has been 8.9%. In January 2016, Prudential Mutua  lFundD Fund re-introduced Annual Dividend frequency and paid dividends in December 2016.

Money Back Option
In December 2015 ICICI Prudential Mutual Fund announced a new option called the Money Back option for ICICI Prudential Balanced Fund. In this option investors can get a fixed monthly cash flow by withdrawing a fixed amount from the scheme depending on prevailing NAV’s of the options selected by the investor. It is the first mutual scheme to have an option like this. Investors should understand that the money back feature does not imply assured returns from the scheme. Investors should also note that all withdrawals from the scheme within 1 year of investment will be subject to short term capital gains tax. This option is also available for the other balanced fund in ICICI Prudential Mutual Fund stable, ICICI Prudential Balanced Advantage Fund.
Conclusion
While ICICI Prudential Balanced fund is a tad more aggressive relative to average balanced funds, investors may consider this product for their retirement planning and other long term financial objectives, through systematic investment plans or lump sum route with a long investment horizon. Given its good dividend pay-out track record, investors who prefer dividends can select from the various dividend options or the money back option of the ICICI Prudential Balanced Fund, depending on their cash flow requirements. Investors should consult with their financial advisors, if this scheme is suitable for their financial planning objectives.
Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.