The Hindu Business Line : HDFC Top 200 Fund: Invest

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 during market downturns. The fund has generated returns that have placed it among the top quartile of diversified funds, consistently over the last five years.

Suitability and performance: The fund is suitable for investors looking for steady rather than spectacular returns. With a track record of over 12 years, it can be part of an investor’s core mutual fund portfolio. Over one- , three- and five-year periods, the fund has delivered better returns than its benchmark BSE-200. The five year annualised returns are a healthy 25 per cent, even after factoring in the recent fall.

For conservative investors, the fund may be a good bet. During every market downturn — the ongoing one which started in January 2008, as well as May 2006 and May 2004 — the fund has contained NAV losses to levels lower than its benchmark.

Over a five-year period, HDFC Top 200 has also done better than some of its diversified fund peers focussed on large-cap stocks such as Birla Frontline Equity and Reliance Vision.

Regular investments through SIPs can be considered in this fund. This would help one ride out short-term losses and average costs during downturns.

Portfolio: The fund invests mainly in the BSE-200 basket and has a large-cap (over Rs 7,500-crore) bias, with over 70 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- and small-cap stocks. Several blue-chip stocks in the fund’s holdings have corrected sharply, with valuations now at attractive levels. Such stocks, with their earnings visibility, may recover in the event of a market rally.

The fund continues to bet on banks and capital goods, which are its top sectors held in the September portfolio. But exposure to defensive sectors such as pharmaceuticals and telecom has been raised as well. The exposures to individual stocks are also not concentrated, the top 10 accounting for only 39.8 per cent of its portfolio. The portfolio comprises 60 stocks, across 19 sectors, providing some cushion against volatility.

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