VR Logo

Master Blaster

HDFC Prudence is a class act. It sprints like an equity fund but delivers the stability of a balanced fund. In the last ten calendar years, the fund has outperformed Sensex every single time--not even a single equity fund can claim such a performance

Surprisingly, the fund has achieved this feat with a 60:40 equity-debt portfolio. In the five-year period ending May 2, HDFC Prudence has delivered 40.77 per cent return every year, close to 41.89 per cent gain of an average diversified equity fund. It has everything that one looks for in a core holding.

The fund has had its share of troubles. Twice it has undergone AMC changes but continuity of fund manager Prashant Jain since launch in 1994 has negated the possible side-effects--and the result is a top-rated and consistent performing fund that can take on even diversified equity funds. Within its category, HDFC Prudence has no match. The fund has rarely been rated below four stars and has got top ratings since December 2002.

Prashant Jain is known for his ability to spot opportunities at the right time. For example, he started to tilt the traditional large-cap portfolio of HDFC Prudence in favour of mid- and small-cap stocks in late 2003 and since then has capitalised on the rally. His sector calls have been brilliant. For instance, he exploited the post-9/11 tech rally by increasing exposure to the sector from 5.6 per cent in November 2001 to 15.8 per cent in December 2003. Similarly, when energy stocks were shooting up in 2002, he increased exposure to the sector from 4.3 per cent in January 2002 to 16.7 per cent by March. He banked heavily on banking stocks and increased exposure from 5.4 per cent in November 2002 to 17.34 per cent in July 2003. Recently, the fund has benefitted from higher allocation to auto and metal stocks.

On the debt side, the fund prefers a cautious approach and keeps bulk of the assets in quality corporate bonds and now commercial papers. With interest rates moving northwards, exposure to government securities is on its way down.

Overall, investors can't have a better option than this. Continuity of the fund manager, unmatched returns and optimum stability make HDFC Prudence the right fund for the long-term. Even an all-equity portfolio can easily accommodate this fund.