Wait and Watch Large Cap Stocks for Next Rally,Time to Forget Unknown Poor Quality Small & Mid Cap

Soaring old eco stocks give HDFC funds a big boost

MUMBAI: Schemes from HDFC Mutual Fund managed by Prashant Jain have been amongst the best performers, clocking high returns in the rally that began March 1. HDFC Equity Fund, which manages Rs 14,375 crore, is up 18.03% and is amongst the top gainers in the multi-cap category.

HDFC Top 200, which manages Rs 11,718 crore, is up 17.3%, the top gainer in the large-cap fund category. HDFC Prudence, an equity-oriented balanced fund, is up 14.4% during the same period. In comparison, the Nifty has gained only 12%.

Though the time period taken into account is short, the rally in these schemes comes as a sigh of relief for the investors, especially after last year's under-performance and the slide in the rankings.

"HDFC funds have historically shown to pick up pace and outperform in prolonged bull rallies. They typically make up for past underperformance in such rallies," says Vidya Bala, head of research at Fundsindia.com.

As per data from Value Research, HDFC Top 200's trailing one year return is -9.52%, its three-year return is 13.36%, compared to its benchmark BSE 200 which is down 6.97% and up 12.80% in the same periods. For HDFC Equity Fund, the one-year trailing return is -11.27%, for three-year period it is 15.193% compared to its benchmark Nifty 500 which is down 6.43% and up 13.58% in the same periods.

This poor performance led to a sharp dip in AUMs of the schemes over the last 15 months. HDFC Top 200's AUM fell from Rs 14,416 crore in January 2015 to Rs 10,403 crore in February 2016, while HDFC Equity Funds' AUM fell from Rs 19,100 crore in February 2015 to Rs 12,590 crore in February 2016.

"One of the main reasons for underperformance of HDFC funds has been its exposure of close to 15% to PSU banks," says Renu Pothen, head of research at ifast Financial.

The fund has close to a 12-15% exposure to PSU banks with another 10% to corporate banks like Axis Bank and ICICI Bank. Its exposure to L&T is 6.3% and 4% to metals. Over the last one year SBI is down 34%, ICICI down 23% and L&T lost 30%.

In the past one-and-a-half months, however, things have changed. Infosys is up 14.7% since February 29, ICICI Bank up 25.34%, HDFC Bank 12.75%, SBI 18.2% and L&T has gained 17.1%.

Can the fund catch up and continue with its stellar performance going ahead? For March 2016, the top five picks of HDFC Equity Fund are Infosys, SBI, ICICI Bank, Larsen & Toubro and HDFC Bank. "The strong point about Prashant Jain is that he sticks to his conviction and does not change his strategy midway," says Kaustubh Belapurkar, head of research at Morningstar India. Infosys which is his top pick has already posted better than expected results and is the No 1 holding in HDFC Equity Fund.

"The banking sector is the biggest financier of the capex that is essential to revive the economy and put it back on the growth track," adds Renu Pothen. She, however, believes that PSU banks will turn around soon, as the government looks to revive growth in infrastructure.

With inflation down, currency stable and interest rates on a downward trajectory margins should improve which will lead to higher corporate earnings.

https://economictimes.indiatimes.co...fc-funds-a-big-boost/articleshow/51918455.cms

 

HDFC funds are part of my Portfolio. These funds did not partcipate in last Bull Run as Fund Manager took heavy bet on Modi devolpment slogan,which falls flat on its face.Fund manger Parshant Jain who before Modi was over weight in FMCG and Consumption went under weight in these and over weight in Modi Stocks like PSU Banks,corporate finance Banks like ICICI and L&T.But after Election Suited Booted Modi forget development and was busy on world tour .Parshant Jain bet on Modi failed creating a big hole in my portfolio also .I hope now Parshant Jain might have learnt Modi lesson ,so now should find good secular growth stocks .

 

I just spoke to Prashant ( a good friend) to share the above priceless wisdom. You really wouldnt want to know what he had to say.

 

Happy to learn that he is your friend.Although I have big bet 15% of my networth with him as fund manager since long and contnue to have lot of respect and faith in him But still my views remains same He was carried away by Modi slogan of Devolpment like rest of nation in last Loksabha polls.This happens to me individually also. Otherwise what is reason of his now fresh buying in retail HDFC bank and Infosys by lowering devolpment bets on Modi stocks like ICICI,Bank of Baroda, SBI and L&T.More over fresh out performance of HDFC funds is not becuase of stock selection but becuase Modi Stocks were beaten down out of shape and become under priced,so it is natural bounce back.Naturally such big star like Parshant need not to agree with a small Invester like me .Please post his view in my inbox ,I am interested even in contrary view of knowldgable person like him.

 

Done

 

My action plan at the start of this thread worked,Portfolio rocking.Feeling Happy