Date:14/11/2004 URL: http://www.thehindubusinessline.com/bline/iw/2004/11/14/stories/2004111400501000.htm

Back HDFC Equity: Invest

Shanthi Venkataraman

INVESTORS can consider exposures to HDFC Equity Fund, one of the top-performing diversified equity funds, on a five-year basis.

The fund has delivered a return of about 27 per cent over the past year, outperforming the broad-based BSE-200 by more than 5 percentage points.

The performance has slowed considerably since the bullish phase in 2003, and a number of funds delivered higher returns over the past year.

HDFC Equity is, however, one of the few funds that have a good, long-term track record. The fund has outperformed the market by a significant margin over the years, generating annualised returns of 50 per cent and about 25 per cent over three-year and five- year periods respectively.

Suitability: The fund is aggressively managed. It also has the tendency to take concentrated exposures to select sectors. This increases the risks associated with the fund.

The strategy of focussing on a fewer sectors and stocks has, however, paid off in the past.

The fund has delivered returns over the years that have compensated for the higher risk.

The fund can be a core portfolio holding for a first-time investor.

Portfolio overview: HDFC Equity is one of the larger diversified equity funds with an asset base of over Rs 1,000 crore.

The IT, banking and engineering sectors are the top three holdings of the fund and account for about 45 per cent of the total assets as of October.

The fund has not adopted a large-cap or a mid-cap focussed investment strategy. Its portfolio has a blend of large-cap and mid-cap stocks.

Mid-caps such as Amtek Auto, Crompton Greaves, United Phosphorous and Century Textiles, figure among the fund's top ten holdings.

Mid-caps of the banking sector, such as IOB and Federal Bank also figure prominently in the portfolio.

The presence of mid-caps could help to perk up returns.

Fund facts: HDFC Equity was launched in 1995. It offers dividend and growth options. The minimum investment amount is Rs 5,000.

Systematic investment plans are also available. There is an entry load of 2.25 per cent for purchases less than Rs 5 crore.

The fund manager is Mr Prashant Jain.