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Mutual Fund Review: HDFC EQUITY FUND

Investment Strategy:

The fund invests mainly in growth oriented stocks. In the past three years, large cap stocks on an average account for 76% of the portfolio, midcap stocks account for 14% of the portfolio, small cap stocks account for 7% of the portfolio and cash holdings account for 2.5% of the portfolio. The fund uses debt and derivative instruments very rarely.

Banking, Information Technology, Pharmaceuticals, Construction & Engineering, Oil Exploration and Watches are the important sectors for this portfolio. These six sectors on an average account for 50% of the portfolio. Banking is the largest sector and allocation to banking has never fallen below 15% in the past three years. This fund has decreased the allocation to the pharmaceuticals sectors from 14.14% in January 2008 to 8.3% in December 2010. However, the Watches sector has seen considerable allocation. From no exposure to the sector in January 2008, the fund has 4.45% of its portfolio in the Watches sector as of December 2010.

Asset Size:

The fund's AUM is around Rs. 8947 crore as at 31 March 2011.

Performance:

This fund is one of the best performing domestic equity funds in India and the best performing multi cap fund on our platform over a 5 year period (31 December 2005 to 31 December 2010). This fund has been consistently performing well and has been on our recommended funds list for the past two years (four recommended funds reviews).

This fund has outperformed its benchmark, the S&P CNX 500 Index across all periods, right from six months till since inception. Over a 1 year period, this fund has given 29.22% while its benchmark has given 14.13% and over a 5 year period, this fund has given 22.75% while its benchmark has given 14.96%. 

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