CRISIL Balanced Index: a benchmark for balanced mutual funds

Mutual Funds

A discussion on the CRISIL Balanced fund: Aggressive Index a benchmark for equity-oriented balanced funds. Balanced mutual funds hold a minimum of 65-70% Indian equity or equity related instruments at all times to be classified as an equity mutual fund by the Taxman.

The most commonly used benchmark for such funds is the CRISIL Balanced fund: Aggressive Index. Unfortunately, each CRISILindex cost a few lakhs and is not available in the public domain. In this post, I use annual return (financial year) returns obtained from JM Fund house fact sheets to compare it with the performance of balanced mutual funds.

Composition of  Crisil Balanced Fund Aggressive Index

Nifty 50 index – 65%

CRISIL Composite Bond Fund Index – 35%

The CRISIL Composite Bond Fund Index itself consists of

  1. CRISIL Gilt Index 50%
  2. CRISIL AAA Long Term Bond Index 20%
  3. CRISIL AAA Medium Term Bond Index 12%
  4. CRISIL AAA Short Term Bond Index 6%
  5. CRISIL AA Long Term Bond Index 5%
  6. CRISIL AA Medium Term Bond Index 3%
  7. CRISIL AA Short Term Bond Index 4%
Crisil-balanced-index-returns
FY returns of Crisil Balanced vs Nifty Total Returns Index (dividends reinvested)
Crisil-balanced-index-returns-2
Approximate evolution of the Crisil Compositive bond index, Crisil Balanced and Nifty TRI

The way I see it, an equity-oriented balanced fund is an equity fund. Therefore, I would expect it to beat the Nifty TRI on a risk-adjusted basis and not just the Crisil Balanced fund.

Readers may recall that I earlier published the downside Capture Ratio of all Mid-cap Equity Mutual Funds and then followed it up with

Mutual Fund Screening with Downside and Upside Capture Ratios

I have now repeated the excercise with Balanced funds with NIfty TRI as the benchmark and comapared the FY returns with Crisil balanced index.

Crisil-balanced-index-returns-3
Please ignore the values for DHFL Pramerica. Data does not exist for that fund and nos are wrong. Thanks Anand for pointing this out.

All the above funds have beat the Nifty TRI Index for 1,2,3,…9Y SIPs. This justifies my opinion that balanced mutual funds should be treated as 100% equity mutual funds.

Read more: Balanced Equity Funds: the low risk, high reward option

Download the balanced mutual fund batch analyzer

Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. You need to only cover my travel fare for the session.

Connect with us on social media

Do check out my books

You Can Be Rich Too with Goal-Based InvestingYou can be rich 243x300 - CRISIL Balanced Index: a benchmark for balanced mutual funds

My first book is now available at a 35% discount for Rs. 258. It comes with nine online calculators. Get it now.  The Kindle edition is only Rs. 199.

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

Cover pink - CRISIL Balanced Index: a benchmark for balanced mutual funds My second book is now only Rs 199 (Kindle Rs. 99) Get it or gift it to a young earner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Create a "from start to finish" financial plan with this free robo advisory software template

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

About Freefincal

Freefincal has open-source, comprehensive Excel spreadsheets, tools, analysis and unbiased, conflict of interest-free commentary on different aspects of personal finance and investing. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. We do not accept sponsored posts, links or guest posts request from content writers and agencies.

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

Published by freefincal

Published

11 thoughts on “CRISIL Balanced Index: a benchmark for balanced mutual funds”

  1. Thanks for the post Pattu.
    Something is not right with the DHFL data (23% SIP returns for 9yrs and such), and that you might want to check on.
    The conclusion remains same however – hail the balanced funds 🙂

    And since, you are delving deeper into the Balanced Funds topic:
    1. Is there a way to segregate the equity and debt portion performance of a fund and compare two funds based on it?
    2. In general, and as the returns of a balanced fund is also a function of the equity and debt re-balancing – how to get data and analyze – the kind off and the frequency of re-balancing that is done and its role in contributing to the overall returns of a particular fund? The rationale is to figure out – if this parameter matters, and if yes, to what extent.

    Thanks

    Reply

    1. Yes that is a mistake. Mentioned it in the legend. Thank you. As reg your other points:

      1. Is there a way to segregate the equity and debt portion performance of a fund and compare two funds based on it?
      2. Effect of rebalancing.
      Not easy, not impossible either, but imo wont help much. Happy to treat them as pure equity funds and go any deeper.

      Reply

      1. Thank you.
        Well, imo having a clear picture on both the counts would increase the comfort level in maintaining an entire retirement portfolio 🙂
        The seminal questions is, can we maintain the debt part of an individual portfolio as well in the balanced fund’s debt part?

        Reply

  3. Both ICICI Pru Child Care Plan and HDFC Children Gift Fund listed are debt oriented hybrid funds (aka MIP funds) not balanced funds (which are equity-oriented by definition).

    Reply

    1. ICICI Prudential Child Care Plan – Gift Plan is eq oriented. The study plan is what you are referring to. Same with the HDFC fund plans.

      Reply

  4. Hello Sir,
    In your example table, the 3 rd fund DHFL pramerica blanced fund has huge difference with peers. It has given 20+% returns in all 9 SIPs. Is it true? What could be the reason for such a huge return?

    Regards,
    Vishnu

    Reply
  6. Pingback: How often Should I review my Mutual fund Investment portfolio? - Jama - Trusted Investment Advisor - Direct Mutual Funds

Your feedback is valuable. Do let us know what you think about the article and help us improve