The Hindu Business Line : HDFC Growth Fund: Hold

HDFC Growth Fund, a diversified equity fund, has registered an improvement in performance over the past two years, after an unimpressive show until 2005. The fund’s three and five-year track records show that it has substantially outperformed the Nifty over these periods. Returns are, however, just marginally higher than the category average.

The fund has a large cap orientation, but with flexibility to invest across the market capitalisation range. Across equity funds from the HDFC stable, this fund has very low portfolio turnover ratio, reconfirming a buy-and-hold approach to investments.

Suitability: The fund is large cap oriented, and focuses on growth stocks. It is for investors with a high risk appetite, as the fund has suffered significant value erosion during declines in markets over the past five years.

The fund’s asset base, at Rs 500 crore as of end July, is small compared to other equity funds in the HDFC portfolio, but makes for greater manoeuvrability.

Performance: HDFC Growth Fund has generated a return of 45 per cent for the one-year period and outpaced the benchmark BSE Sensex by 12 percentage points. The fund’s one and two-year track records show a significant improvement i n relative performance, compared to the preceding years.

Portfolio Overview: HDFC Growth Fund has 40 stocks in its latest portfolio and the top 10 stocks accounted for close to half of the assets. The fund’s sector exposures, however, have been slightly unconventional with sectors suc h as electrical equipment, pharma and refineries among the top exposures in July 2007. Pharma and consumer non-durables continued to be preferred sectors, remaining among the top exposures for close to a year. Pharma stocks, which under-performed through most of the past year, have delivered because of the fund’s superior stock selection. For instance, the fund picked up Divi’s Laboratory after the steep correction last May and the stock turned out to be a multi bagger.

Fund facts: HDFC Growth was launched in September 2000. The fund is managed by Mr Srinivas Rao Ravuri. NAV per unit is Rs 54.8

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