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HDFC Equity Fund's stock picks

June 30, 2004 14:17 IST
Last Updated: June 30, 2004 14:21 IST


HDFC Equity Fund (HEF) is among the leading diversified equity funds in the country today. The fund has an impressive track record and its portfolio is always a subject of interest within the investing community.

We had done a small analysis of its portfolios over the last 5 months to get an idea of what is on the fund manager's mind.

To be sure, HEF pursues an aggressive investment strategy. It has a concentrated portfolio of about 25 stocks with a good mix of large cap and mid caps. Each sector has no more than 2-3 stocks. The fund has been consistent in pursuing this strategy and there has been no dilution on this front.

Consistency in stock selection
COMPANYJAN 2004 FEB 2004 MAR 2004 APR 2004 MAY 2004
GRASIM INDUSTRIES9.8%9.5%9.2%9.6%9.8%
SATYAM COMPUTERS6.1%6.9%5.9%7.7%9.5%
SBI9.1%9.0%9.3%9.5%7.5%
BHEL6.3%7.1%6.4%4.1%7.2%
MAHINDRA & MAHINDRA-5.9%5.6%5.7%5.4%
RELIANCE INDUSTRIES5.7%4.5%5.1%4.6%5.2%
ZEE TELEFILMS4.5%4.8%4.5%4.4%4.8%
MARUTI UDYOG6.6%5.1%4.3%4.3%4.3%
BHARTI TELEVENTURES.2.7%2.9%3.0%-4.2%
AMTEK AUTO---3.2%3.9%
(Numbers are as a percentage of net assets.)

As is evident, HEF is consistent in its stock picks with the top 10 stocks being a part of its core portfolio over the last 5 months. The top 10 stocks in its portfolio (as on May 31, 2004) accounted for 61.8% of net assets. This is on the higher side for a 'diversified' equity fund.

We maintain that a diversified equity fund should have not more than 40% of its assets in the top 10 stocks. This is a level that global 'diversified' equity funds maintain. We plan to address this issue in another article at a later date.

  • Want to analyse stock portfolios of leading equity funds over the last 4 years?

    The lesson for the investor from this is that he should look out for funds that have a consistent bunch of stocks that can be identified as the core portfolio.

    This is as opposed to having a portfolio that changes dramatically every few months, which would imply that the fund has no defined character and is more a trading vehicle rather than an investment avenue.



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