The Hindu Business Line : HDFC Equity Fund: Invest

HDFC Equity, with its impressive track record, is a good investment option. The fund has a large-cap tilt and, at this stage of the bull market, it may be an appropriate option for the core portfolio of funds. Buy the fund with a three-to-five year perspective.

For more than a decade, the fund has weathered different phases in the market with aplomb and delivered attractive value to long-term investors. The consistency in performance across quarters during this period is also a factor that should give investors a high degree of comfort, especially about its ability to sail though any sluggish market phase.

This is important, as we have moved into the third year of a bull market that has witnessed equity at the broad market level rising more than four-fold.

Investors can opt for the Systematic Investment Plan (SIP), as it will ensure that the fund deployment is phased out and they take advantage of any weakness in the broad market. If you have a lump-sum for investment, you could deploy it in a liquid fund such as HDFC Liquid, and then use the systematic transfer route to HDFC Equity.

An investment through the SIP route will have delivered gains of about 100 per cent over the past year and 37 per cent since launch. The latter is a good 20 percentage points higher than the returns turned in by the benchmark. HDFC Equity has not only outpaced the indices, but also a host of peer funds. This remains one of our preferred picks.

Portfolio overview: The top ten exposures account for 63 per cent of assets. HDFC Equity has always opted for a compact portfolio without concentrated exposures in any single stock.

Despite these aspects, the portfolio wears a well-diversified look that will be helpful in handling any choppy phases in the market.

The fund has been an early entrant to the engineering space and the relentless bullish phase in stocks from this sector has been largely responsible for the fund's performance.

A good example is the exposure in Siemens, which accounts for about 5 per cent of the assets under management.

Significant changes to the portfolio in recent months have been the exit from a close to eight per cent holding in ONGC and enhanced exposures to the IT space through Infosys and Satyam Computer.

The fund has an asset base of Rs 2,907 crore and this will not be a burden, as there has been substantial expansion in market depth.

Suitability: The fund is appropriate for investors looking for a long-term option with a large-cap tilt.

As the market is at an all-time high, investors opting for the SIP could also choose dividend re-investment.

Aggressive investors could opt for the dividend payout option rather than the growth option.

Fund facts: HDFC Equity Fund was launched in January 1995. The minimum investment for one-time investment is Rs 5,000; for the SIP route, it is Rs 1,000.

The entry load is 2.25 per cent . The fund manager is Mr Prashant Jain.

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