HDFC Equity Fund - A steady performer

HDFC Equity Fund is a Equity Diversified scheme with highest exposure to Banking sector. The fund has remained a consistent performer throughout the good and bad market phase. Investors who are looking to build a long term portfolio can include this fund as the core holding, reckons Arnav Pandya

• HDFC Equity Fund is one of the largest funds in terms of its asset size as well as one that has been in operation for a long period of time. At the end of August 2010, the fund had the highest exposure to Banks with the share here at 20 per cent of the portfolio. This was followed by consumer non-durables, Oil and Pharma. In terms of the individual holdings, given the size of the fund it has managed to blend both large caps as well as mid cap holdings smoothly in its portfolio. SBI was the top holding with nearly 9 per cent of the portfolio in this area. This was significantly higher than the second placed ONGC followed by Titan Industries, Bank of Baroda, Bharti Airtel and ICICI Bank.  The fund had a portfolio turnover ratio of just 57 per cent and it was outperforming the benchmark the S&P CNX 500 over the one, three and five year time periods.
• Six months later Banks were still at the top of the sector exposure list with the figure here going over the 20 per cent mark. This was followed by consumer non durables, software and petroleum products all of which were slightly less than the 10 per cent figure. SBI continued to be the top holding with the figure here in excess of 8 per cent followed by ICICI Bank, Reliance Industries, TCS, Infosys, Titan and Bank of Baroda. The funds portfolio turnover ration dipped slightly to 42 per cent while the beta of the fund inched up marginally. The fund remained an outperformer over the one, three and five year time periods.
• The portfolio turnover ratio of the fund continued to drop and reached a level of 35 per cent by the end of August 2011. At the same time the beta had inched up to 0.97 which meant that the fund was closer to replicating the show of the market as a whole. Banks remained the top sector followed by software, Pharma and petroleum products. SBI was still the top holding in the fund though ICICI Bank was slowly closing in followed by TCS, Bharti Airtel, Infosys and Coal India.
• Six months later at the end of February 2012 banks remained at the top of the sector charts while software managed to gain an exposure that crossed the 10 per cent mark. Consumer non durables, petroleum products and Pharma were the other sectors with a significant share in the portfolio. SBI continued to the top holding followed by ICICI Bank, Infosys, Tata Motors DVR, TCS and Bharti Airtel. The funds portfolio turnover ratio had dipped further. The fund was an outperformer over the one and three year time periods.
• The funds portfolio turnover ratio remained steady over the next several months and by the end of August 2012 it was around 30 per cent while the beta had come down slightly to 0.94. Banks continued to remain the top sector in the portfolio followed by Software, consumer non durables and petroleum products. SBI was the top holding followed by ICICI Bank, ITC, Infosys and Tata Motor DVR. The fund was a slight underperformer over the one year period but an outperformer over the three year time period.
• This is suitable for investors who are looking to build a long term portfolio as they can select this fund as one of the core holdings in their portfolio. The fund has been a consistent performer through good as well as bad times in the equity markets. The manner in which the fund is managed in the context of its massive size also generates confidence.