Top performer

FUND PICK: HSBC Equity

HSBC Equity was launched in December 2002. The fund charges an entry load of 2.25 per cent for investments up to Rs 4.999 crore. There is no exit load. The minimum investment is Rs 5,000.

Performance and portfolio: The fund has matured to take on peers. After registering a breathtaking gain of 160 per cent in 2003, it gained 38.73 per cent in 2004, maintaining its top-quartile performance for the second successive year.

This marvellous performance has resulted in the fund becoming a nearly Rs 1,600-crore scheme - the second biggest diversified equity fund in India.

The fund follows a top-down approach and takes sector calls. Within the sector, it carefully picks stocks with strong fundamentals. Almost half of its returns come from sector calls and the rest can be attributed to prudent stock selection. It has a preference for medium and large companies.

Through 2004, the fund's favourite sectors has been technology, auto and energy, together accounting for half of the portfolio. With this sector combination, the fund has proved its mettle in both bad and good times in 2004.

During the initial dull phase of 2004 (January-May), the fund's loss of 18 per cent was lower than the average peer's loss of 23 per cent. And when the market took off post-June 2004, it gained 38 per cent till mid-November, beating more than half of the funds in its category. Though the recent rally is not confined to any sector, the fund has made smart gains.

In 2003, its hot favourite was the technology sector. The fund manager does not hesitate to invest in sectors even when its peers are not doing so.

It increased its holding in Infosys just ahead of the company's September 2003 results, expecting the stock to do well and benefited. But the fund was cautious in the banking sector, and missed the rally of 2003.

Investments in auto stocks like Mahindra & Mahindra and Tata Motors also proved profitable. Both the stocks appreciated handsomely that year.

In the April 2003-January 2004 bull market, the fund generated a return of 182 per cent, outperforming its benchmark, the BSE 200, which rose by 131 per cent in the same period. 

Top holdings
As on Dec 31, 2004	Value  (Cr)	Net  Assets  (%)
Mahindra & Mahindra	111.54	6.92
SBI	104.97	6.51
Hindustan Petroleum Corp	88.66	5.50
Grasim Industries	84.19	5.22
Maruti Udyog	80.88	5.02
HCL Infosystems	78.06	4.84
Patni Computer Systems	64.22	3.98
ACC	56.39	3.50
Oriental Bank	55.31	3.43
Reliance Industries	48.03	2.98
Mphasis BFL	45.71	2.83
HCL Technologies	43.61	2.70
Jindal Iron & Steel Co	41.79	2.59
Amtek Auto	41.14	2.55
Tisco	38.51	2.39
Indian Oil	35.53	2.20
Zee Telefilms	34.49	2.14
Gujarat Ambuja Cements	32.64	2.02
Apollo Tyres	31.94	1.98
Satyam Computer Services	31.70	1.97

Outlook: The fund has been delivering a strong performance. If it continues to do, it could emerge as one of the great investment stories for Indian equity investors.

- Value Research