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Don’t give up on HDFC Top 200

HDFC Top 200’s rating has dropped from 5-star to 4-star. But you shouldn’t consider exiting it as yet…

I’ve been investing Rs 1,000 a month by way of SIPs since the last 1 year in HDFC Top 200. I have a time horizon of 15 years. Now that there has been a drop in the rating of this fund, should I switch to another fund?
-Sachin Balwant Patil

You have reason to be disappointed with HDFC Top 200, which has been a top-rated fund for all these years. But the past 1 year has been the most disappointing year it has faced. However, a slip in rating from 5-star to 4-star is not a reason to panic. Being a 5-star fund means that the fund is among the top 10 per cent funds in its category, but a 4-star fund is still among the top 22.5 per cent, which means it is not a bad fund on a risk-adjusted basis. Hence, the drop in rating means that you should closely watch the fund. You can consider exiting it if the rating falls further. But don’t give up on HDFC Top 200 as yet; it has a long credible history of outperformance.

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