The fund's revved up stance should appeal to its investors who are in search of more pickup from this offering. After a fairly uneventful 2004 and 2005, HDFC Growth beat the category average by 10 percentage points last year. Savvy sector selection has been a testament to the fund manager's skills. While its peers were neutral towards the healthcare sector, the fund's allocation increased from 4.44 per cent in January 2006 to 11.33 by the end of the year on the back of concentrated bets in Sun Pharmaceuticals and Divi's Laboratories.
Similarly, the fund defied popular trend and pruned its allocation to financial services while increasing it to the automobile sector. Typical to the fund's style, the increased exposure to particular stocks or sectors is done in a systematically and phased manner by building positions slowly. With a comfortable diversification across 35 stocks, buy-and- hold seems to be the preferred strategy with stocks like BHEL deeply entrenched in the portfolio for more than 73 months. But aggression is evident in its significant exposure to mid- and small-cap stocks. In fact, for a period of 12 months between March 2004-'05, the fund's focus shifted to mid cap stocks.
But don't get carried away by the current performance. By and large, it has been a middle-of-the-road performer with periodic spurts of brilliance. What's impressive is that in such a frenzied market, it has managed to deliver great results and emerge out of the shadows. This can probably be credited to the new fund manager who has been around for a year. Going by the recent performance, HDFC Growth may finally have earned a place in the sun. This fund is worth a second look.