Is it all right to compare mutual funds based on performance?

Fair question? Or unfair?

Let us say we compare Hdfc Prudence fund and Icici Prudential balanced advantage fund.

Fair comparison?

And what does the past performance tell us? Is that useful?

What if Hdfc Prudence had kept 83% in equity and I Pru bal adv fund kept 66% in equities? and the equity market boomed? Fairly obviously H Pru got its TIMING right – or it ┬ástuck gold!

What if Icici Pru bal advantage fund had a 70% equity bias and it had all its money in SMALL CAP/MEDIUM cap bias- and that sector boomed?

What if H had 30% of its portfolio in high risk corporate bonds and I Pru decided to put it in Gsec?

I can see Icici Pru bal advantage fund underperforming its peers. I like that….LOL…it has a large cap bias (like I pru discovery) and LARGE CAP is underperforming the index!

I like balanced funds – i do think many of them including I Pru bal adv fund help people in keeping the debt portfion tax free. However I do not like the expense ratio and recent portfolio.

In case of Hdfc Prudence – the fund manages Rs. 30000 crores will BE FORCED TO take a large cap bias…because midcaps will not be available in a sensible volumes.

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