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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
(Numbers are as a percentage of net assets.)
|COMPANY||JAN 2004 ||FEB 2004 ||MAR 2004 ||APR 2004 ||MAY 2004 |
|MAHINDRA & MAHINDRA||-||5.9%||5.6%||5.7%||5.4%|
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.