HDFC Equity fund may perform well in long run

HDFC Equity Fund has recently under-performed its peers due to its exposure to the public-sector bank stock – SBI. Inspite of higher allocation to public sector banks leading to under-performance the fund remains attractive for investments due to the long term focus of the fund manager.

The bottom up approach used by the fund manager helps identify unique business models in companies. Companies with strong balance sheets and competitive advantages are identified.

Over 1 year period the Fund has lagged in performance to its peers with returns generated being at 3.61 per cent over 1 year. Over 3 years period the returns generated by the fund stand at 26 per cent on annualised basis with the returns generated over 5 years time frame for the fund being at 14 per cent. Thus over long term i.e 3 to 5 years the fund has been able to outperform its peers.

Over 56 per cent of the portfolio is invested in blue-chip large cap stocks , with 24 per cent of the portfolio being invested in large cap stocks. Mid cap stocks enjoy over 11 per cent allocation whereas 7 per cent of the portfolio is invested in small cap stocks.