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HDFC Funds Underperform over 1 Year Period

February 4, 2008

Prsahant JainThe markets maybe buoyant but our SIP investments have underperformed the markets in the past 6 months and 12 months period in the hands of HDFC Fund Managers [Prashant Jain, Chirag Setalvad and Vinay Kulkarni] .

HDFC Equity Fund:
Mainly focused on Large Cap stocks. This fund has delivered returns of 53.25% Vs 62.08% [S&P CNX 500]. However the fund continues to beat the benchmark for period longer than 3 years.

HDFC Top 200 Fund:
Has some exposure to Midcaps but a strict no to smallcap.This fund has delivered returns of 54.10% against benchmark [BSE 200] 60.03%. The fund continues to beat the benchmark for period longer than 3 years. Both the funds are managed by Sr. Fund Manager Mr. Prashant Jain, almost since inception. The fund manager believes in sticking to highly liquid stocks. In the past we have seen him pick-up turnaround companies or pick new winners and stick to them to reap the bounty. However, in the past 12 months their has been no aggression from the fund managers side but we continue to believe his performance will beat the benchmark over a 3+ year period.

HDFC Long Term Advantage Fund:
This fund was launched in the bear phase in Indian market. This fund has also failed to beat the benchmark SENSEX over a 12 month period. It generated returns of 40.36% Vs 46.84. [One cannot compare this fund for just 12 months period because investor funds are locked-in by default for 3 years] However, over a 3 year period the fund has beaten its benchmark index. The fund qualifies for ELSS investment tax benefit under section 80 of the IT act.

HDFC Tax Saver Fund Growth:
This fund saw change of guard with Tushar Pradhan moving to AIG and Vinay Kulkarni taking the drivers seat. This fund has again failed to beat its benchmark S&P 500 over 12 month period. However, it continues to beat benchmark and create wealth over longer term.

Since we advise Investors to have a long term view, we need to take atleast a 3 year period under review before one can pull the plug.

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