HDFC GROWTH
After an uneventful start, it began to get noticed in 2006, when Srinivas Rao Ravuri assumed charge. It then turned out to be a category outperformer, barring a disappointing 2009.
Last year, Ravuri's over-cautious stance made it a third-quartile category underperformer. The suddenness of the recovery caught him off guard. Despite the equity market starting an upward journey in March 2009, the fund did not lower exposure to defensive sectors and held on to cash up to July 2009. Typical to the fund house, he focused on companies that depended on domestic demand, with strong balance sheets.
| Period | Return (%) |
| 3-month | 2.66 |
| 6-month | 19.51 |
| 1-year | 27.28 |
| 3-year | 5.73 |
| 5-year | 23.25 |
He also avoided highly leveraged companies. His play-it-safe attitude backfired in 2009 but the current year's year-to-date (YTD) returns show that he stands vindicated. In his search for good fundamentals, he often bets on sectors against the current tide. In 2006, his peers were neutral towards healthcare, while he increased allocation to it. Similarly, he pruned allocation to financial services, while increasing it to automobiles. In 2007, the fund was more into healthcare and basic engineering, while others chased metals. The pattern followed in 2008. Even some of his stock picks stand out for the lack of popularity when they first made an appearance in the portfolio. Such as C&C Constructions, Solar Industries, Ahmednagar Forgings, KNR Constructions, Emico Elecon (India) and Technocraft Industries India. Recently, he has been trimming exposure to mid-caps and booked profits. On the whole, though it's never had a smooth ride, it's one of the better players in this category.
RELIANCE REGULAR SAVINGS EQUITY
When Omprakash Kuckian took over the fund in November 2007, its assets under management were only Rs 290 crore. He rapidly changed its complexion and used the flexibility a small fund offers to the hilt. His moves paid off and in the December 2007 quarter, he delivered 54.66 per cent (category average, 25.7 per cent). But that has changed. With a corpus that has crossed Rs 3,000 crore, he still takes strong sector bets but plays it safe with individual stock bets. Nevertheless, he has managed to impress, and in 2009, beat the category average by 20 per cent (102 per cent).
| Period | Return (%) |
| 3-month | 1.03 |
| 6-month | 16.64 |
| 1-year | 20.98 |
| 3-year | 8.56 |
| 5-year | 26.69 |
The portfolio is well balanced between large-and mid-caps. However, last year, had he bet more on mid-caps and lowered his cash holdings rapidly, as soon as the market rallied, he would have probably delivered even more. However, going by the current YTD returns, his large-cap bets have certainly worked out well.
The fund manager attempts to capitalise on valuation differentials between mid-and large-cap stocks, which at times could result in aggressive churning. The direct fallout of such a strategy is that the market cap keeps changing. This fund started off as a large-cap fund but resembled a pure mid-cap offering by the end of 2007. Since January 2009, it has taken on a distinct large-cap tilt and is evenly balanced today between large-, mid- and small-caps.
Kuckian confessed to adopting a wait-and-watch strategy, to see how interest rates pan out and how inflation is dealt with some days back. He still believes interest rates are firm, given that inflation has not been tamed. He also feels the market is fairly valued and though he has a decent exposure to banking, he has increased his pharma exposure.Overall, the funds' numbers speak for themselves. This one is a top pick.
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UTI DIVIDEND YIELD
The fund's mandate demands an investment of at least 65 per cent of the portfolio in equity shares that have a high dividend yield at the time of investment. A look at the record makes one wonder whether the fund manager follows this principle diligently. But Swati Kulkarni claims to have never deviated from the mandate.
The fund is best suited to those who want decent returns with good downside protection. Its impressive performance in 2007 (71 per cent) put it ahead of the Sensex (47 per cent) and multi-cap category (60 per cent). Its fall in 2008 was less than that of the Sensex, as well as the category averages. But the fund faltered in 2009. Kulkarni began to seriously up the equity allocation only from June 2009. However, what has always worked for this fund is smart bottom-up stock picking and sector allocation. By doing that, Kulkarni managed to marginally outperform the Sensex and the other two categories in 2009 as well. Her overweight calls in IT, automobiles and fertilisers helped.
| Period | Return (%) |
| 3-month | 3.23 |
| 6-month | 18.18 |
| 1-year | 25.71 |
| 3-year | 10.13 |
| 5-year | 22.14 |
Besides scouting for companies with sustainable cash flows, Kulkarni also looks at capital appreciation potential as the next filter. Using a multi-cap strategy, she has put to rest the notion that dividend yield funds can only impress during market downturns. Simply put,the fund has navigated through good and bad times, to emerge as an impressive performer.