The Hindu Business Line : HDFC Top 200 Fund: Invest

Investments with a long-term perspective can be considered in HDFC Top 200 Fund. With the broad market showing signs of volatility, the fund’s track record of delivering consistent performance and ability to generate impressive returns during market upturns and contain declines during downturns make it a good investment option.

That the fund has managed to more or less keep pace with the benchmark BSE-200 in the rally since the March lows lends further credence to its ability to generate returns. The fund, however, may be more suitable for investors who value consistent performance rather than high absolute returns.

Performance: HDFC Top 200 recorded compounded annual returns of 10 per cent, 20 per cent and 32 per cent on a one-year, three-year and five-year time frame respectively. In these periods, not only did it outperform its benchmark by a considerable margin, it also surpassed that return by its category average.

Its one-year returns are way above even that of its peer DSPBR Top 100 Fund; returns over longer time-frames such as three and five years, however, stand comparable. What also supports the case for investing in the fund is its participation in the equity rally that began early March. Not having made any cash-calls and being fully invested in equities, along with the right mix of sectors appears to have helped the fund in the rally so far. While the majority of the diversified equity funds failed to keep pace with the recent surge in equity prices, HDFC Top 200 has done well to yield over 80 per cent returns on the table, falling a couple of points short of its benchmark’s return.

On a monthly rolling return basis, the fund has, in the last three years beaten its benchmark six out of ten times, with the average margin of out-performance or underperformance hovering under two percentage points.

Portfolio: Given the fund’s mandate of primarily investing in companies from the BSE-200 basket, it is no surprise that over three-fourths of its latest portfolio is tilted towards large-cap and emerging large-cap stocks. Its portfolio, however, also features select stocks from the mid-cap (17 per cent) and small-cap category (4 per cent).

While the fund has gradually built on its mid- and small-cap exposure in recent months, the extent of its participation in the recent rally, led primarily by the mid- and small-cap stocks, speaks highly of its sector and stock picking ability. In terms of sector calls, the fund continues to place high bets on financials, energy and consumer non-durables.

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