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K.Venkatasubramanian

Investments can be considered in the units of HDFC Top 200 Fund, considering its good long-term track record and ability to contain losses better than its benchmark in market downturns.

Suitability and Performance: The fund is suitable for investors looking for stable and steady rather than spectacular returns. With a track record of over 11 years, the fund can be a part of the core mutual fund portfolio. Over three-year and five-year periods, the fund has delivered better returns than its benchmark BSE-200.

For risk-averse investors also this fund may be a good bet considering that during the market downturn of Jan-March 2008, May 2006 and May 2004, the fund contained losses better than its benchmark and even some of its diversified fund peers focussed on large-cap stocks.

Regular investments through SIPs can be considered in this fund. This would help one take advantage of any market upturn and contain losses better than in theme/sector or other high-risk funds during any market downturn, in addition to averaging purchase cost.

The fund invests mainly in the BSE-200 basket and has a large-cap (over Rs 7,500 crore) bias, with nearly 80 per cent of the portfolio invested in such stocks. This focus may help the fund reduce the impact from any earnings surprises/blips that cause volatility in mid-/small-cap stocks.

As of March, banks, capital goods, pharmaceuticals and consumer non-durables dominated the portfolio (56 per cent). While the first two sectors have been in favour over the past year and have corrected sharply in the last 3-4 months, the latter are regarded as defensive sectors.

This combination, along with exposures to sectors such as software and telecom, where stocks have corrected to relatively lower valuations compared to their highs, suggests strong return potential.

The exposures to individual stocks are also not concentrated and the top 10 account for about 41.4 per cent of its portfolio. The total portfolio comprises 50 stocks across as many as 16 sectors, providing some cushion against volatility.

Fund details: The latest NAV is Rs 143.03 for the growth option. Mr Prashant Jain manages the fund.

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