Wednesday, July 17, 2013

HDFC Equity Fund

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

We like this fund for its superior performance and not getting swayed by day-to-day happenings in the market. One might call it rigidity but that has paid off handsomely in this fund's case -- clearly reflected in the returns posted over the last 10 years.

 

Strategy


It invests in medium- to large-sized companies with proven credentials.

It has frequently invested in large caps such as SBI, Infosys, ONGC, BHEL and mid- and small-caps like Crompton Greaves, Indo Rama Synthetics, CMC and Himatsingka Seide.

 

Its exposure to financial is high with SBI occupying the top spot with around 10 per cent exposure, followed by ICICI Bank.

 

Otherwise, its holdings in a single stock remain below 7 per cent. Importantly, the fund manager picks up stocks which are held by only few other mutual funds. Currently, it has 28 stocks which are part of less than 10 other mutual funds' portfolio.

 

It remains fully invested most of the times and does not resort to high cash exposure during market downturns. In the past 3 years, its equity allocation has been above 95 per cent.

 

Performance


The fund's performance speaks for itself. It has lagged behind peers only a few times and that can be attributed to staying away from stocks which gained favour just for a short period of time. It has been a part of the top-2 quartile in 14 out of 19 times.

Sticking to convictions was clearly evident when the exposure to metals was low even when it was the best performing sector in 2007. In 2011 it fell at par with the benchmark and could not curtail its losses by a higher margin as it did in 2008. Possibly because its exposure to FMCG (the best performing category) was lower and that could have led to its sluggish performance. Also, since its assets have grown from Rs 5,000 crore to 11,000 crore now, its exposure to mid caps has come down consistently. From 48 per cent in 2008 to 30 per cent in 2010 to 23 per cent now. This had led to increased dependence on large caps whose returns are much more subdued compared to mid caps.

 

Why invest?


The fund manager's ability to not give in to the temptation of momentary gains is commendable. Being one of the least expensive funds is another plus.

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

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