Skip to main content

Mutual Fund Review: HDFC Growth

 

 

Savvy stock selection has helped the fund emerge as a good long-term bet

 

This fund may not have had a smooth ride but has emerged as one of the better players in this category.

 

After an uneventful start in its initial years, the fund began to get noticed in 2006, when the current manager assumed charge. It turned out to be a category outperformer over the following years and even contained the downside well in 2008.

 

Savvy sector selection has been a testament to Srinivas Rao Ravuri's skills. In 2006, while his peers were neutral towards Healthcare, the fund's increased allocation to it on the back of concentrated bets in Sun Pharma and Divi's Laboratories helped. Similarly, the fund defied popular trend and pruned allocation to Financial Services while increasing it to Automobiles.

In 2007, the fund was more into Healthcare and Basic-Engineering while its peers were into Metals. As the category as a whole increased exposure to diversified companies, this fund moved out of them altogether. A similar pattern followed in 2008.

But in 2009, the fund lagged behind with a return of 75 per cent (category average: 83%). The recovery caught Ravuri off guard. Despite the equity market starting its upward journey in March 2009, the fund barely lowered exposure to defensive sectors (Healthcare and FMCG) last year. Besides Tisco or Infosys, he kept away from Metals or IT. To add to it he held an average 12 per cent in cash for the three months ended July 2009. "I was focussed on companies that depend on domestic demand and have strong balance sheets. I was cautious on sectors dependent on the global market recovery," he says. "Commodities are extremely volatile and prices were dependent on economies in Europe and China. In IT, I was wary of exposure to companies that got the bulk of their revenues from the global financial services sector."

 

Besides sector bets that set him apart, he also has holdings in stocks which are not too popular, such as C&C Constructions, Solar industries, Ahmednagar Forgings, KNR Constructions and Technocraft Industries India. "Since I am also an analyst and we have a strong research team, we are capable of coming up with good stock ideas that are not covered by broking firms. Stock selection is based on attractiveness of business, quality of management and valuations," he says. The small size of his fund helps by allowing greater flexibility.

 


Popular posts from this blog

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...

Capital Protection Oriented Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...

SBI Small Cap Fund

SBI Small Cap Fund scheme seeks to provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme by investing predominantly in a well diversified basket of equity stocks of small cap companies. SBI Small Cap Fund has widened its margin of outperformance relative to its category and benchmark in the last one year, earning itself a five-star rating. The fund shows a hefty 18 percentage-point outperformance relative to its peers in the last one year, 5 percentage points over three years and 4 percentage points over five years. Needless to say, it has also outpaced its benchmark to deliver convincing five-year annualised returns of 37 per cent. A believer in the credo that a small market cap does not reflect business quality, the fund looks for five attributes in the stocks it buys: competitive advantage, return on capital, growth, management and valuation. SBI Small Cap Fund is among the few in this space to remain at quite a man...
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