Consistently Reliable - HDFC Top 200 Fund
9/27/2010 2:46 PM Monday
Besides consistant performance, there are, as our experience tells us, many other parameters that should be considered in selecting the right fund, including the fund house and the fund manager(s) track record, risk-return analysis, and so on. Here at DSIJ we have put into place a set of acid tests to make sure that our readers are informed about the best funds only without going through any trouble on their part.
This time around we have returned to one of the most consistent and well-managed funds viz. HDFC Top 200. This fund, like many other established ones, has seen its ups and downs but what makes it endearing is that it has managed to reward its long-term investors quite well. This is quite evident from the fact that in the three, five, seven, as well as ten-year period the fund has been among the top ten performing funds. If this is not enough, one has to study its performance during the bull (CY09) and bear (CY08) phases of the markets when it has managed to beat its category by 1,009 and 1,023 bps respectively.
Given this scenario, we are tempted to recommend this fund for the second time within the past 12 months’ time. Post our recommendation, the fund’s NAV has grown by over 26 per cent and its AUM grew by over 4 times. Such a rock-solid performance by the fund is on account of the astute fund manager, Prashant Jain, who has been in charge of its reins since June 19, 2003. At HDFC AMC, Jain also manages funds like HDFC Equity, Prudence, MIP (Long-Term) and Infrastructure. And all these funds have managed to beat their category returns in the longer run by fair margins. Such a performance has been possible on account of the sound portfolio calls as well as the process-oriented AMC approach.
In August the fund had a concentrated sectoral allocation with over 50 per cent of the assets invested in the top three sectors. Out of the 63 stocks in its equity portfolio, the top ten stocks contributed over 42 per cent of the total assets. The portfolio was primarily tilted towards the large-cap stocks with close to 80 per cent of the assets invested in these scrips. Moreover, the fund’s sectoral allocation seems conservative considering the fact that defensive stocks are in favour. Thus, looking at the fund’s performance over the long run and its portfolio allocation, even novices or low-risk investors can take long-term exposure to this fund through SIP.
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