HDFC Top 100 Fund, an open-ended equity scheme, on Thursday completed 27 years of operation, delivering a compound annual growth rate (CAGR) of around 19 per cent. According to HDFC Mutual Fund, a Systematic Investment Plan (SIP) of Rs 10,000 invested (total investment of Rs 32.40 lakh) in the fund, would have grown to Rs. 6.88 crore by September 29, 2023.
“This performance is a testament to the fund’s ability to navigate market fluctuations and deliver steady growth to investors,” said the asset management company in a statement.
The HDFC Top 100 Fund predominantly invests in large-cap stocks and was launched in October 1996, making it one of the longest-running mutual fund schemes in India.
“Large-cap stocks offer stability and better risk adjusted return, making them an attractive option for investors looking for investment opportunities over the long term,” said Rahul Baijal, Senior Fund Manager, Equities, HDFC Mutual Fund.
According to HDFC Mutual Funds, the portfolio construction follows a bottom-up approach to stock picking blended with top-down sector and macro trends.
Here are the key features of the HDFC Top 100 Fund:
Risk-Adjusted Portfolio: The HDFC Top 100 Fund combines a growth at a reasonable price (GARP) and value investment approach. The AMC said portfolio construction emphasises assessing the risk-reward of available opportunities, with more than 80 per cent of the investments in established large-cap companies. The core strategy is medium to long-term, maintaining a disciplined approach to finding quality companies at reasonable valuations.
Risk Management: According to the firm, the fund focuses on risk management with active positions being taken in a controlled manner while ensuring compliance with regulatory and internal risk guidelines. High-conviction investments are made after a thorough evaluation of a company’s industry positioning and business cycle.
Historical Stability: Large-cap stocks have historically shown stability during economic fluctuations, offering a favourable risk-reward ratio. The large-cap index has outperformed mid and small-cap indices in the majority of the past 17 years, as per the firm.
According to Riskometer, the risk associated with the fund is “very high”, making it suitable for investors who are seeking to generate long-term capital appreciation/income and invest predominantly in large cap companies
HDFC Top 100 Fund Portfolio
According to a presentation by the AMC, the HDFC Top 100 Fund has a diverse portfolio comprising of key companies such as ICICI Bank Ltd., HDFC Bank Ltd., Reliance Industries Ltd., NTPC, Infosys, Axis Bank Ltd, Larsen and Toubro Ltd, Bharti Airtel, State Bank of India and others. The portfolio is predominantly focused on large-cap stocks, accounting for 92 per cent of the holdings, with a smaller allocation to mid-cap stocks (3.9 per cent).
The fund maintains a significant cash position of 32 per cent along with net current assets. Notably, the fund demonstrates an active approach with 55 per cent of its holdings in non-benchmark stocks. The turnover ratio stands at 17.58 per cent. Overall the assets under management (AUM) stand at Rs 26,391 crore as of September 30, 2023.
The bulk of the fund’s investment is allocated to the financial, energy, technology, consumer staples, and healthcare industries.
Return on investment:
According to the data provided on the performance of the fund, for investors who have embarked on a 15-year SIP journey, allocating a total of Rs 18,00,000, the returns have been substantial, recording an impressive 13.75 per cent Compound Annual Growth Rate (CAGR). Similarly, investors who committed to a 10-year SIP with a total investment of Rs 12.00 lakh enjoyed a CAGR of 13.86 per cent, highlighting the fund’s consistency in delivering favorable returns.
HDFC Mutual Fund
Shorter SIP tenures, such as 5 years and 3 years, have also generated notable returns. A 5-year SIP with a total investment of Rs 6 lakh yielded an impressive CAGR of 17.95 per cent, showcasing the fund’s ability to generate growth over a relatively shorter period. For a 3-year SIP with a total investment of Rs. 3.6 lakh, the CAGR stood at an attractive 19.15 per cent. Even a one year SIP with an investment of Rs. 1.20 lakh offered substantial returns, recording a CAGR of 24.84 per cent.