You are currently here -> Mutual Fund Mutual Fund Review: HDFC Top 200
Mutual Fund Review: HDFC Top 200
Finance - Mutual Fund

We like this fund for its solid long-term record and skilled management

We like this fund for its solid long-term record and skilled management. With a 5-year annualised return of 27 per cent, it is the best performer in its category (February 28, 2010).

It's not just the recent performance that has been endearing. In its 13-year existence, it has more than proved itself, barring 1999 when high exposure to FMCG and Healthcare backfired in the tech-dominated rally.

In 2006 and 2007, investors fretted at the average performances. In 2006, it was the high exposure to Defensives that pulled it down. In 2007, Energy was offloaded even when the going was good while exposure to Financials did not impact as much as Metals and Construction, where the fund's exposure was low. "The portfolio moves were, in my opinion, consistent with our investment approach," says Jain. "The criteria that go into selecting stocks/sectors are quality, our understanding, growth prospects, valuation of businesses and the composition of the benchmark - BSE 200." In 2008, the fund's success in standing upright in a bear market, without resorting to debt or high cash levels, was a testimony to Jain's skill who restricted the fall to just 45 per cent, around 11 per cent less than BSE 200 and 8 per cent lower than the category average.

Finally in 2009, Jain silenced critics by beating the category average by a margin of 14 per cent. Low cash levels, being overweight in Autos and Banking (upped exposure to SBI, a stock that galloped) and underweight in Power Utilities and Energy (reduced exposure significantly to RIL which underperformed the broader market) helped.The investment portfolio is primarily drawn from companies in the BSE 200 index. But the fund manager can also invest in listed companies that would qualify to be in the top 200 by market capitalisation on the BSE, though unlisted.

Investors can be sure of a good quality portfolio and a fund manager who sticks by his convictions, irrespective of whomever else is playing the momentum game. "We invest in good quality businesses, keep away from richly valued investments to the extent feasible and remain diversified," says Jain. The fund has gotten more diversified over time. Can't be helped seeing how large the fund is.


Free Email Subscription

Free Daily Email Updates



Subscribe in a reader