Speaking after the launching of the fund, managing director of Prudential ICICI AMC, Ajay Srinivasan said that the equity component in a balanced fund provided the potential for capital appreciation, while the debt component offered the stability. Such a scheme would be ideal to those investors who wanted to earn a return which is higher than that of income funds without taking 100 per cent exposure in equity. In other words, such a structure offers the investors an opportunity to enjoy the `best of both the worlds', Srinivasan added.

The scheme opened for initial subscription on Monday and will close on October 7, 1999. The investment pattern has been designed to take advantage of tax relief by pegging the minimum investment level in equity at 51 per cent. Maximum investment in equity would be 80 percent. Existing investors of income fund have the option to switch to balanced fund. Srinivasan also said that Prudential ICICI managing a corpus of Rs 2100 crore has the expertise both in equity and debt schemes.

Its flagship equity scheme has delivered an absolute return of 90 per cent since inception while its flagship debt fund has offered an annualised return of 13.12 per cent over the last 12 months. Prudential ICICI manages Rs 1550 crore in debt schemes and Rs 550 crore in equity schemes. It also has an open-end tax fund, liquid fund, gilt fund and a FMCG fund.

He said while election results would be a main determinant of future direction of stock markets, another key factor would be availability of more concrete evidence of economic recovery when corporates declare their first-half performance.

``Moreover, falling interest rates, improving outlook on earnings of corporates and sufficient liquidity in the system support bullish equity conditions,'' Srinivasan added. The company would adopt abottom-up approach to pick up stocks. At present, the portfolio has allocated 15 per cent to the healthcare sector, followed by 11 per cent to software, 10 per cent to automobiles, nine per cent each to chemicals and consumer goods, besides oil and gas, telecom, capital goods, cement, finance and metals.