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HDFC Prudence Fund - Just the right mix

| 4/11/2011 3:36 PM Monday

Are you one of those whose heartbeat quickens or slows down according to market movement, but who still want to add the zest of equity returns to their portfolio? Then this is a perfect match for your portfolio as the fund offers the best of both the worlds. Being a balanced fund, its mandate allows it to invest in equities in the range of 40-75%, which acts as a catalyst for the fund’s performance. And the remaining 25-60% can be allocated to debt and others, which offers a safety net to its investors, thereby providing a right mix of aggression and defence in one fund. 

HDFC Prudence Fund is one of the oldest in the MF industry and is spearheaded by one of the industry’s renowned fund managers, Prashant Jain, since its inception. Since he is associated with this fund from day one, it brings a lot of stability and consistency in the fund’s performance and portfolio management. Prashant has been one of the most successful and consistent fund managers in the country and also co-manages other four funds with Miten Lathia at HDFC AMC, namely, HDFC Equity, Top 200, Infrastructure and MIP Long-term. All these funds have given top quartile and consistent returns in the long run.

That this fund is no exception is evident from its performance wherein it has given 21.57% annualised returns since inception. However, the fund has also witnessed a rough patch in 2007 and 2008, when it underperformed its category returns marginally. It found its way again in 2009 and 2010 when it managed to grab the first and the second positions respectively in terms of its performance among its peers. In the three- and one-year period this fund has managed to stay ahead of its category by over 947 and 751 bps respectively. If that is not enough, it has also managed to beat many of the only-equity funds in the long run and has provided the best risk-adjusted returns in the balanced fund category with a sharp ratio of 0.61.

Such impressive statistics are backed by sound portfolio calls and astute stock selection. In February the fund had invested close to 75% of its Assets in equities and the remaining was invested in debt and others that comprised mainly GSecs and other debt papers. 

The 79 stocks-led equity portfolio seemed well diversified wherein the contribution of the top 10 holdings and the top three sectors to the total asset remained well under 35%. However, the fund manager has astutely managed the equity portfolio wherein the market-cap allocation was equally divided among the large and mid-cap stocks to manage risk and returns. Thus looking at all these attributes, the fund seems a good bet even for conservative investors, who should take exposure to this fund through SIP.

 

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