Skip to main content

Mutual Fund Review: HDFC Prudence

After a dismal performance in '07 and '08, HDFC Prudence makes a come back with impressive return

 

Last year, the fund silenced all critics. This fund has beaten the category average every single year since inception, right till 2006. It turned out to be very average in 2007 and 2008. Questions cropped up if it had finally run out of steam. It obviously has not.

 

Fund manager Jain has been aggressive with the equity allocation but has ensured that investors were well rewarded. An annualised return of around 25 per cent over the past 10 years is nothing short of impressive. None of its peers have been able to match such a performance. To put it in perspective, just nine open-ended equity funds (out of 72) which have been around for at least 10 years have been able to deliver such a performance.

Jain sticks to his convictions and does not get carried away by momentum plays. When other fund managers were betting on Real Estate and Energy, he was conspicuous in his lack of enthusiasm. In 2007, exposure to Autos stood at around 8 per cent while allocation to Energy was lowered to around 3 per cent by December. BSE Auto delivered 3 per cent while BSE Oil & Gas and BSE Power delivered 115.25 per cent and 122 per cent, respectively. In 2008, he not only held on to his high equity allocation (the fund house rarely goes heavy on cash) but even to his exposure of lower cap stocks.

 

Jain has no problem moving against the herd, as reflected in his sector selection but even in the stock picks. He has not invested in Reliance Industries since April 2009 (earlier too investments were limited to brief periods) though all its peers hold that stock. A consistent feature in his portfolio is Savita Oil Technologies (since 2005). Currently, there are 10 stocks in which less than five other funds are invested in. "We invest in good quality businesses, remain diversified and keep away from richly valued investments to the extent feasible," explains Jain.

 

Though the fund has always stayed well within its equity limit (75%), ever since mid-2006, the allocation to equity has always been above 70 per cent. The fund manager got punished for this in 2008 but stood vindicated in 2009. Though the fund follows an all-cap strategy, the portfolio is tilted towards mid and small caps. However, the portfolio is very diversified, currently at 72 stocks. On the debt side, the fund largely invests in debentures of the financial sector with small exposure to GOI Securities and Structured Obligations (SO).

 

Popular posts from this blog

Group Health Insurance

Buy Group Health Insurance Online   For Human Resources, the biggest challenge today is to decide whether medical benefits should be offered to employees or not, what type of plans should be offered, what will be the cost and how will the cost be split between employees and employer. Well, most of these are subjective and would depend on a lot of factors including company size, average employee salary, etc. However, this article will give you a fair idea on how you should go about deciding these factors: 1. Why offer group health insurance benefit to employees : Studies have proved that retention rates among employers offering GHI are much higher than the ones who are not offering. Moreover, the cost of providing this benefit as a percentage of salary is very low as compared to the perceived value. As an example, say if average salary of an employee in your organization is 4 LPA. If you decide to offer a health insurance benefit to him for a Sum insured of ...

JM Financial Mutual Fund - Its Schemes

  JM Financial Mutual Fund is a part of JM Financial Group which is one of the first mutual fund companies in India which started its operation in 1993-1994. JM Financial Asset Management Limited is sponsored by JM Financial group. The mission of the group company is to generate good returns in all the product categories. JM Financial Mutual Fund has launched a variety of schemes in the following categories. ·                            Equity ·                            Debt ·                            Arbitrage ·                            Liquid Equity Schemes: The schemes that are launched in the equity category are: ·                            JM Midcap Fund ·                            JM Balanced Fund ·                            JM Agri and Infra Fund ·                            JM Basic Fund ·                            JM Contra Fund ·                            JM Contra Fund ·                            JM Emerging Leaders Fund ·             ...

Birla Sun Life MIP II Savings 5

  Birla Sun Life MIP II Savings 5 - Invest Online   Have you traditionally been a debt investor but now wish to test waters in equities? Then, debt-oriented funds such as Birla Sun Life MIP II Savings 5 (Birla Savings 5), which have limited exposure to equities, may fit your requirement. With a five year return of 10.5 per cent compounded annually, the fund managed a good 3-3.5 percentage points more than its benchmark Crisil MIP Blended Index, as well as its category average. The fund appears well poised to capitalise on a falling interest rate scenario and has increased the average portfolio duration of its debt instruments in recent times. Suitability Birla Savings 5 is suitable only for conservative investors. If you want to make a beginning in equities and cannot take any short-term declines in your stride, then this fund will suit you. If you are already an equity investor and want to use a debt-oriented fund merely as a diversifier, then you may prefer peers from the HDFC and Re...

Why credit history is critical?

Will you need a loan to buy a car or a house? Do you know why some people get their loans sanctioned quickly without any hassle, whereas others find that their approval is delayed or their application is rejected? If you want a loan, you will need to work to build a solid credit history because this can have a bearing on the ease with which you get loans. Read on to learn more about what is a credit history and how to build a good credit score. What is a credit history? Your credit history is a way of tracking your credit behaviour and habits — basically it shows how disciplined and regular you are when it comes to repaying your dues on loans that you have taken. It will show a complete record of your past borrowing and repayment record including details about any late payments or if you have defaulted on a loan. This track record is readily accessible to lenders and is used by them to when reviewing your loan application. Borrowers who have historically had a bad record of managing...

Choose gold ETF over Physical Gold

Investing in gold is overall a good portfolio hedging strategy as long as gold does not account for more than 5-10 per cent of your investment portfolio. Between physical gold and gold ETF, investing in gold ETF is a better proposition because these funds invest in physical gold making them the closest to investing in physical gold at no risk of holding physical gold.   You will need to have a demat account to invest in gold ETFs and there is little to choose between any of the gold ETFs, you can pick any fund that you wish to as long as you pick the fund with the lowest expense ratio.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   1) DSP BlackRock Mutual Funds: http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html   2) Reliance Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html   3) Reliance Mutual Funds: http://prajnacapital....
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now