HDFC Equity Fund: Don't Write it Off

Dec 17, 2013
Prashant Jain's disciplined investment approach has always ensured that investors are eventually rewarded.

There is no reason to write off HDFC Equity just because it has hit a rough patch this year. Granted, the fund’s year-to-date and 1-year returns have not gone down well with investors. But a look at the 5-year annualized returns should remind them of the solidity of this offering.

There have been occasions in the past where the fund has hit a roadblock but it has never failed to make a convincing comeback. In 2006 and 2007, it underperformed the category average but stood vindicated in 2009 and 2010. In 2011, the fund fell a bit more than the category average, but again climbed the charts in 2012.

Jain is a fund manager who sticks to his conviction. He did not get carried away by the tech bubble in the late 1990s which peaked early 2000. When the fall came, his funds stood apart from the carnage. Ditto with the bubbles in the real estate and infrastructure sectors in 2007.  This only goes to indicate that there will be times when the market punishes him for his stance, but it is not long before he bounces back with a vengeance. Being incredibly diligent with his research, his focus is on bottom-up stock picks and he chooses to avoid finding refuge in cash during market downturns.

This is a large-cap offering that investors can consider for their portfolio. The fund currently has a 4-star rating and our analyst has reiterated his Gold rating of the fund. To read the detailed and updated analysis, click here.

Understanding the analyst rating

Morningstar analysts assign the ratings on a five-tier scale with three positive ratings of Gold, Silver, and Bronze, a Neutral rating, and a Negative rating.

Unlike the Morningstar Rating (star rating) which assigns 1 to 5 stars based on a fund's past risk-adjusted returns versus category peers, the Analyst Rating is the summary expression of Morningstar's forward-looking analysis of a fund.

The Analyst Rating is not a market call but reflects an analyst's conviction in the fund's ability to outperform its peer group and/or relevant benchmark on a risk-adjusted basis over the long term.

The methodology to arrive at this rating is based on five key pillars--Process, Performance, People, Parent, and Price.

To check out the ratings assigned to various funds, click here.

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