A Conservative Choice - HDFC Top 200 Fund

Launched in 1996, HDFC Top 200 has a decent and a long track record that could be one of the parameters for investors to consider before taking exposure to this fund. HDFC Top 200, alike other funds, has seen its ups and downs since its inception. However, the fund has emerged as a good choice for risk-averse investors considering the fact that it invests in the top 200 companies in terms of market capitalisation, asset allocation strategy and furthermore in the 2008 market fall, the fund has managed to restrict the losses of its investors.

As per the March fact-sheet, the fund was majorly invested in sectors like banks (15.28 per cent), consumer non-durables (12.09 per cent) and software (9.07 per cent). Out of 66 stocks portfolio, the top ten stocks contributed 37.15 per cent of the net asset. The fund’s portfolio was majorly tilted towards the large-cap stock, while the portfolio is well diversified considering its exposure in 66 stocks. The fund on a MoM basis didn’t make a major change in its sectoral allocation. However, it had altered its exposure towards individual stocks in the portfolio. And looking at the portfolio turnover, this fund seems to be following a buy and hold strategy on its investments.

Moreover, the fund’s sectoral allocation seems conservative considering the fact that defensive sectors like FMCG and pharma contributed almost 20 per cent of the equity portfolio. And the same time, the fund’s cash and equivalents holding stood at almost 10 per cent of the portfolio. Thus, looking at the large-cap tilt, sectoral and stock allocation along with the cash holding, this fund seems to be a good bet primarily for the conservative investors.

The fund is being managed by Prashant Jain since June 19, 2003 and since then it has managed to beat the category returns by 620 basis points. And secondly, Prashant’s enduring track record with this fund ensures stability and consistency in investment style and performance. At HDFC AMC, Prashant also manages funds like HDFC Equity, Prudence and Infrastructure. And such is the proficiency of the fund manager that all these funds have managed to beat the category returns over the long-term with ease. Even this fund in the short as well as the long-run has been able to outperform its category with ease. The fund in its one and three-year period has managed to beat the category returns by 1,078 and 819 basis points. The fund has also managed to outperform its benchmark, BSE 200 returns. Since its inception, the fund’s net asset appreciated by 10.33 times, where as the BSE 200 has appreciated only by 4.12 times, indicating the overall consistency of the fund. As on March 31, 2009, the fund’s mammoth AUM of Rs 2,086.26 crore recorded a MoM rise of 8 per cent or Rs 154.42 crore - that indicates the investor’s interest in this fund. Even non-aggressive investors can take long-term exposure to this fund through SIP.