Two decades and four market cycles later, HDFC Equity stands as India’s biggest equity fund. The reason it has stood the test of time lies in its consistent returns, which have built wealth for scores of Indians who have invested in this fund. Although its performance in recent years has paled in comparison to several others, the fund has managed to turn around its performance to post 53.72 per cent return in 2014.

A conservative fund management approach with low investment risk has made it a must-have for every type of investor and the fund still makes its mark among the OLM Elite funds. The fund mostly stays in the large- and mid-cap space but moves across market capitalisation. Though small caps find a minimal presence, but given its scale, their allocation is fairly represented. What has worked most is the fund manager’s unwavering focus and faith in fundamentals that seldom sway by market trends and fads.

With Prashant Jain managing this fund since its inception, it has stuck to its investment mandate For instance, despite the market latching on to the infrastructure boom in 2007, the fund stayed away from the sector. While the fund’s performance was not comparable to its peers, a year later, when the market tanked, the fund was the least affected.

In the most recent rally, this fund has once again emerged as a winner to re-establish itself as one of the most preferred funds. A bet for the long run, HDFC Equity has posted over 20 per cent return compound annual growth rate (CAGR) since inception. The additional benefit when investing in the fund is its ability to check on the fall when the market tanks. Although Jain argues that size is not a constraint, given the depth of the Indian market, the rising asset in this fund does diminish the dexterity to manage it. For the time being, its performance does not indicate any slackness.

This story first appeared in Outlook Money April, 2015 issue.

nk@outlookindia.com