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Committed to Growth

HDFC Equity has everything that one looks for in a core holding

The ability to spot the right opportunity at the right time and make swift moves to exploit the opportunity, investing with a lot of conviction, courage to take big stock and sector specific calls, a mix of large-, mid- and small-cap stocks and out-of-the-box thinking by long-time fund manger Prashant Jain have helped HDFC Equity deliver great returns year after year. Even during the May-June stock markets crash, the fund managed a top-quartile performance--though it too lost 21.75 per cent, the pain was much lower than that of an average peer.

HDFC Equity is the only diversified equity fund that has outperformed the category average return every year for the past eight years. In four of the past five calendar years, the fund has delivered top quartile performances. And the fund has achieved this with below average volatility, making it one of the few equity funds that have enjoyed four-star and above ratings through their life.

This fund's versatility is tough to beat. Fund manager's ability to think ahead of time and change the portfolio accordingly have resulted in good performance in the bull as well bear phases. The fund also times its moves in and out of performing sectors to the perfection. For example, when the Supreme Court halted PSU disinvestment in September 2003, the fund sold its entire oil sector holding of 9 per cent. It built a fresh position again in March 2004 when PSU stocks started rallying.

The fund manager invests with lots of conviction. Allocation to top five holdings remains close to 40 per cent, with the rest of the portfolio spread over around 25 stocks. This makes the fund's portfolio concentrated. However, you will rarely find mid- or small-cap stocks in the top five holdings. Above all, the fund manager stays committed to his picks for a long period of time.

If you are looking forward to build a long-term portfolio, this fund deserves a place for its consistent performance record, great management bandwidth and low volatility.