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Aarati Krishnan

THE HSBC Equity Fund has delivered impressive returns of 147 per cent, in its maiden year, figuring among the top ten diversified equity funds, in terms of its returns over 2003. Both the fund's stock selection strategy and the quality of stocks in its portfolio have been consistently good.

Unit-holders with an appetite for risk, can hold on to their exposures, as it appears well positioned to benefit from any further rally in equities. However, as the fund has just completed a year of operations, it may be prudent to wait for the fund to accumulate a track record over at least two market cycles before making fresh investments in it.

Conservative investors should consider booking profits on part of their investments, to lock into the returns available over the past one year. Those in the Growth option can contemplate switching to the Dividend option, as this will ensure periodic profit-booking on their holdings.

In terms of stock and sector preferences, HSBC Equity Fund has been unconventional. The fund has consistently maintained a high weightage to frontline IT stocks. The fund appears to favour a buy-and-hold approach rather than one that centres around frequent churning of the portfolio. The fund made the following changes to its portfolio in the month of November 2003:

Stocks in: Amtek Auto, Escorts, BPCL and Wockhardt are the new additions to the portfolio during November.

Stocks out: The fund completely liquidated its holdings in Jubilant Ornagosys, Finolex Industries and Satyam Computer during the month.

Sectoral shifts: Pharmaceutical stocks replaced software as the fund's top sectoral holding in the month of November, with the allocation climbing to 14.1 per cent, from 12.7 per cent the previous month.

The fund appears to have booked profits on software stocks, with the exposure to IT consulting plunging from 17.9 per cent the previous month to 12.7 per cent in November. The other major sectoral allocations in the fund were to automobiles (10 per cent), banks (6.9 per cent), and capital goods (6.5 per cent).

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