102000  |  INF179K01BE2  |  4 star  |  Gold

NAV

$ 417.71

1-Day Total Return

-0.86
%
INR | NAV as of 6/23/2017 9:30:00 AM | 1-Day Return as of 23 Jun 2017

TTM Yield

0.00%

Load

Multiple

Total Assets

145.9 bil

Expenses

2.25%

Fee Level

--

Turnover

51%

Status

Open

Min. Inv.

5,000

30-Day SEC Yield

--

Category

Large-Cap

Investment Style

Large Growth
Author
Morningstar's Take | 30/01/2017
by Himanshu Srivastava

Manager Prashant Jain is sticking to his guns. He continues to have faith in the financial services sector, particularly in State Bank of India. In 2015, the public sector bank’s fluctuating fortunes (following a rise in nonperforming assets and poor results) had an impact on the fund’s showing. However, it performed well in 2016 and the fund made a promising comeback.

The bank continues to feature as Jain's top pick and we aren’t surprised. He has long favoured public-sector banks in his portfolios, believing that they will be major beneficiaries of India’s long-term structural growth. His conviction in SBI stems from confidence in its core operations, ability to raise inexpensive monies,  and attractive valuations. Indeed, given his investment style, this is how we expect him to act.

Research is central to the investment style, with Jain effortlessly combining top-down and bottom-up analysis (with more emphasis on the latter) to identify companies with strong balance sheets and business models. He pays heed to valuations while picking stocks, freely combining relative and absolute valuation methods. Despite largely investing in S&P BSE 200 stocks, he has shown immense flair with portfolio positioning. His in-depth research has given him the confidence to take meaningful variances from index weights at both stock and sector levels. It is noteworthy that over the years, Jain has demonstrated considerable skill in navigating the fund across market conditions and delivered pleasing long-term results.

Admittedly, the process has its biases. The valuation consciousness coupled with aversion to speculative fare may cause the fund to lag peers in momentum-driven markets. Further, in a downturn, Jain’s policy of staying fully invested could lead to underperformance versus peers that get their cash calls right. Yet, we believe the process will hold long-term investors in good stead.

Our reasons for liking the fund--a supremely skilled manager, a robust process, and one of the best asset managers--remain intact. We reiterate our Morningstar Analyst Rating of Gold.

Morningstar Analyst Rating™
Analyst Rating
Portfolio Role

Betting on sectors which stand to benefit from a turnaround in the Indian economy.

People

In our opinion, Prashant Jain is one of the best portfolio managers in the country.

Parent

HDFC Mutual Fund fosters an investment culture and ranks among the best asset managers.

Process

A research-driven process that focuses on quality growth stocks.

Performance

Over the long haul, the fund boasts a stellar track record across the risk and return parameters.

Price

The fund’s expense ratio is lower than the median of the India large-cap category.

Important Disclosures

Unless stated otherwise, this report was prepared by the person(s) noted in their capacity as Manager Research Analysts (i.e., fund analysts) employed by Morningstar, Inc., or one of its affiliates. It has not been made available to the issuer prior to publication.

Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Manager Research Analysts’ expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst Ratings are not guarantees nor should they be viewed as an assessment of a fund’s or the fund’s underlying securities’ creditworthiness.

No material interests are held by Morningstar or the Manager Research Analyst in the financial products that are the subject of the research reports or the product issuer. Regarding Morningstar’s conflicts of interest: 1) Manager Research Analysts’ compensation is derived from Morningstar’s overall earnings and consists of salary, bonus and in some cases restricted stock; however, Manager Research Analysts are neither allowed to participate directly or try to influence Morningstar’s investment management group’s business arrangements nor allow employees from the investment management group to participate or influence the analysis or opinion prepared by them. Further information on Morningstar’s Code of Ethics policies is available from http://corporate.morningstar.com/us/asp/subject.aspx?xmlfile=540.xml

Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information contained herein is not represented or warranted to be accurate, correct, complete, or timely. This report is for information purposes only, and should not be considered a solicitation to buy or sell any security. Redistribution is prohibited without written permission.

For Recipients in India: Research on securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (“Investment Research”) is prepared by Morningstar Investment Adviser India Private Limited, which is registered with the Securities and Exchange Board of India. Your access to the Investment Research does not establish an advisory relationship with Morningstar Investment Adviser India. You should seek the advice of a financial professional before making an investment decision to ensure, among other things, that the security is suitable based on your particular needs and circumstances.

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