The Hindu Business Line : HDFC Top 200 Fund: Invest

EXPOSURES may be considered in HDFC Top 200 Fund, as it remains one of the better options in the equity funds space. The portfolio, which has about 50 stocks, appears well positioned to benefit from the underlying trends in the economy over the next year. It is likely to weather any choppy trends in equities with limited damage.

An investment may be considered using a systematic investment plan, especially at this stage in the bull market. This will ensure that investors capitalise on weakness in the broad market.

HDFC Top 200 has, over the years, accumulated an impressive track record. It has comfortably outpaced the BSE 200, its benchmark, as well as a host of diversified equity funds. Its ability to adroitly handle bullish and bearish phases is proven, as it has encountered several such phases over the past decade. Since its launch in 1996, the fund has generated annual returns of 27 per cent.

With returns of 65 per cent and 55 per cent over the past three years and one year respectively, the fund has made the most of the protracted bullish phase in equities. For a fund that has always had a tilt towards large-cap stocks, these return numbers are impressive. This is why we believe that this fund should be one of the top choices in any portfolio of equity funds.

Suitability: The fund's risk profile is in line with what one may expect of a typical diversified fund. On a risk-adjusted basis, too, the fund has rewarded investors handsomely.

Investors could consider allocating at least 20 per cent of their equity funds' portfolio to this fund. They can opt for the growth option, though dividends are exempt from tax. Buy into the fund with a two-to-three year perspective.

Portfolio overview: The preferred sectors in the portfolio are IT, engineering, consumer products and banks. These account for about 55 of the assets. In IT, the fund has opted for frontline stocks, with Infosys, TCS, Satyam Computer and Wipro figuring among the top ten holdings. Several of the mid-cap stocks in which the fund had invested a couple of years have now graduated to large-cap status.

A few examples are Crompton Greaves, Siemens and MICO. Only a few mid-caps, such as Amtek Auto, Titan Industries and Apollo Tyres, dot the portfolio. The more pronounced large-cap tilt is likely to be a positive at this stage of the bull market. With an asset base of about Rs 700 crore, the fund still has a high degree of flexibility in portfolio management, and this aspect, too, should aid performance.

Fund Facts: HDFC Top 200 was launched in October 1996. The minimum investment is Rs 5,000. There is an entry load of 2.25 per cent while investors can exit at NAV. The NAV of the Growth Option is about Rs 70 per unit while that of the Dividend Option is close to Rs 30 per unit. Mr Prashant Jain manages the fund.

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