The Hindu Business Line : HDFC Top 200 Fund: Invest

Investors making a beginning on equity investments or those scouting for low-risk equity options for their core portfolio may invest in the HDFC Top 200 Fund.

Though the fund has only managed a middle-of-the-road performance in recent times, it remains one of the most consistent performers within the universe of diversified equity funds.

The fund’s ability to outperform its benchmark through good as well as adverse market phases makes it a good option for conservative investors looking to contain downside risk.

Suitability: HDFC Top 200 Fund is best suited for conservative investors who target steady, rather than top-of-the-class, returns from equity investments.

For one, the fund’s mandate — investing mainly in companies from the BSE 200 basket — makes for a portfolio that is tilted towards large cap and emerging large-cap stocks.

Second, the fund’s performance record also suggests that it is more suited to investors who value consistency rather than high absolute returns.

Performance: HDFC Top 200 Fund’s one-year returns, at about 30 per cent, are not very impressive when compared to other diversified equity funds such as Birla Sun Life Equity, Magnum Multiplier or Birla Frontline Equity Fund (returns of 40-47 per cent over the year). The fund’s performance ranks quite high on consistency, as it has managed to outperform its stated benchmark about two-thirds of the time over the past five years (See “Funds for All Seasons” in Business Line dated September 9). It has managed to live up to this track record even over the past two years, a very challenging and volatile period for Indian stocks.

Despite its otherwise conservative stance, the fund takes focused exposures to its top stocks and is also “growth” oriented. The top 10 stocks typically account for up to half of the portfolio, showing fairly concentrated exposures.

Size, though, is not a key concern from a fund management perspective, as the fund focuses on the liquid large and emerging large-cap stocks.

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