HDFC Top 100 Fund, a long-standing player in the Indian mutual fund landscape, has celebrated its 27th year in 2023 with an outstanding performance. Over this period, the fund has managed to deliver an impressive Compound Annual Growth Rate (CAGR) of approximately 19%. A significant testament to its strength lies in a hypothetical scenario: an SIP investment of Rs 10,000 on the first business day of every month since its inception, totaling Rs 32.40 lakh, would have grown to an astounding sum of around Rs 6.88 crore by September 29, 2023.
Investment Approach: A Blend of Wisdom
The fund’s investment approach is built on a solid foundation, combining a bottom-up approach to stock selection with a keen awareness of top-down sector and macro trends. This strategy incorporates a diverse mix of GARP (Growth at a Reasonable Price) and value investing, with a strong emphasis on the quality of business models, management, and financial metrics. Portfolio construction is dynamic, with a focus on assessing the risk-reward of opportunities at any given time.
Steadfast Focus on Large-Cap Stocks
HDFC Top 100 Fund maintains a disciplined investment philosophy where more than 80% of the portfolio is consistently invested in well-established large-cap companies. This approach is framed with a medium to long-term perspective and ensures a careful eye on quality companies with reasonable valuations.
Risk Management and Diversification
The fund’s active approach to risk management is notable, adhering to regulatory and internal risk guidelines. High-conviction bets are taken only after thorough evaluation of the company’s positioning in the industry and the business cycle. The portfolio is well-diversified, and sector deviation calls are made judiciously compared to the benchmark.
Large-Cap Stocks: Stability and Opportunity
Large-cap stocks, known for their stability during economic fluctuations and attractive risk-reward ratios, have historically proven their worth. In recent years, the large-cap index has outperformed mid and small-cap indices in the majority of calendar years. Given the recent trends, large-cap stocks, represented by HDFC Top 100 Fund, offer an appealing opportunity for investors with medium to long-term horizons.
Rahul Baijal’s Perspective
Rahul Baijal, Senior Fund Manager – Equities at HDFC Mutual Fund, emphasized that HDFC Top 100 Fund’s consistent performance is a result of rigorous research, disciplined investment practices, and a commitment to well-established businesses. Large-cap stocks remain a stable and attractive option for investors seeking long-term investment opportunities, particularly in today’s market environment.