Jun

2020

MULTICAP CATEGORY

HDFC
EQUITY
FUND

COMPREHESIVE FUND REVIEW & RATING

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Benchmark Nifty 500 TRI
Category Multicap Category
Fund Start Date January 01, 1995
AUM Rs. 18,495 Crores (as of Jun 30, 2020)
Returns since 16.9% p.a.
inception
Objective To generate capital appreciation / income from a portfolio,
predominantly invested in equity & equity related instruments.
NAV (30th Jun 2020) Regular: 534.2 | Direct: 565.4

Market Cap
Jun-20
Feb-11 Jun-14 Nov-17 3%
Jan-10
8% 11% 10% Jun-20
17% Feb-11
Nov-17 9%
10% Jun-14
17% 15% Jun-20
Jan-10 87%
12% Feb-11
78% Nov-17
Jun-14
75%
71%
Jan-10
67%

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May-10

May-14

May-15

May-18
May-11

May-12

May-13

May-16

May-17

Jan-19

Jan-20
Sep-19
May-19

May-20
Jan-10

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-18
Sep-10

Sep-13

Sep-14

Sep-18
Sep-11

Sep-12

Sep-15

Sep-16

Sep-17

Large Cap Mid Cap Small Cap Cash & Others

Inference
Above graph shows how portfolio allocation of this fund has changed in last 10 years. This
fund even though is a multi-cap hasn’t done too wide changes in its allocation. It has
consistently kept its Large cap allocation between 65%-80% and Mid cap between 8-15%
and rest in small caps. Currently, the fund has 87% allocation in Large caps which is second
highest in the category. Fund has just 1% cash holdings.

Fund House & Fund Start Date

HDFC Mutual Fund – The Second largest Mutual Fund House in India.
Established – 2000
Fund Start Date - January 01, 1995

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Inference
This scheme was launched under Zurich India Mutual Fund as Zurich Equity Fund in 1995.
Zurich Mutual Fund was acquired by HDFC in 2003 and it became HDFC Equity Fund at that
time. Fund now belongs to the biggest Fund house in India and has lot of experience.
Therefore, deserves a Green star here.

AUM
Fund has an AUM of Rs. 18,495 Cr as on Jun 2020
25000 170%
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119%
20000 120%

92%

87%
15000 70%
53%

AUM Growth
69% 54%
AUM in Rs.

23% 26%
16% 18%
38%
10000 20%
26% 5%
0
15% 16%
-13% 7%
-16%
0 -15%
-6%

5000 -19% -21% -30%

-48%

-48%
11,886

10,005

19,181

16,653

23,021

21,754

23,357
10,765

18,495
4,717
1,978

2,465
1,036

5,400
1,750

8,289
2,212

9,646
2,539

2,955

2,386

4,459

5,635

8,651

9,092

9,169
0 -80%
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-20 Jun-20

HDFC Equity Fund Category Avg HDFC Equity Fund % Growth Category Avg % Growth

Inference
Fund is the Second largest Fund in the category even though it is not growing so well like
category in last 3 years. But still for a such a good AUM which shows investors trust in fund’s
management, it deserves a Green star here.

Returns
Trailing Returns

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 Regular Plan Trailing returns Direct Plan Trailing returns

15% www.MFYadnya.in 15% www.MFYadnya.in

9% 8%
10% 8% 10%
5% 5% 6% 5%
5% 3% 5% 2% 4%
2% 1%
0%
0% 0%
-1%

Returns
Returns

-5% -2% -5%

-10% -10%
-11% -15% -11%
-15% -12%
-13%
-20% -20%

-25% -24% -25% -23%

-30% -30%
1 Year 3 Year 5 Year 10 Year 1 Year 3 Year 5 Year

HDFC Equity Fund Category Nifty 500 TRI HDFC Equity Fund Category Nifty 500 TRI

Inference
Trailing returns show much below average and benchmark performance by the fund in last
year. This bad performance in recent year has majorly impacted its 3 and 5 years returns.
Fund has not beaten the benchmark in any of the periods. Only 10 year returns are near
benchmark.

Calendar Year Returns

60%
54%
54%
50%

39% 37%35%38%
40%
36%
34% 33%
30% 29%
22%
20% 15%

9%
10% 7% 9%
5% 5% 4% 7% 5% 5%
4% 0%
0%

-5% -4% -2%

-4%
-10%

-20%

-24% -26%
-30% -27%

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-40%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

HDFC Equity Fund Category Nifty 500 TRI

Inference
Calendar year performance of the fund shows only 1 major bad performing year i.e. 2015
where fund performed way below category average and benchmark Nifty 500 TRI. Fund has
given very good performances in 2009 & 2010 but mostly near average after that. In bear
markets, fund has performed better than average in 2008, worse in 2011 and average in
2018. In 2019 though funds performance has dipped and is below category average as well
as benchmark. Overall, fund has beaten both benchmark & category average 4 times out of
11 with 4 very near average performances too (2012, 2013, 2014, 2018).

Rolling Returns

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 Probable Probable
Rolling Lowest Highest
Low High
Returns Returns Returns
Returns Returns
Period (CAGR) (CAGR)
(CAGR) (CAGR)
HDFC Equity 3 Years -5.6% 28.9% 5.0% 20.9%
Category Avg 3 Years -5.3% 30.8% 6.0% 23.1%
HDFC Equity 5 Years -0.5% 22.4% 7.8% 17.8%
Category Avg 5 Years 0.5% 23.1% 10.0% 19.7%
HDFC Equity 7 Years 7.8% 16.3% 10.7% 14.6%
Category Avg 7 Years 9.5% 17.6% 12.4% 16.1%
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Inference
Rolling returns are lower than category average in all different observation periods – 3, 5 & 7
years. Overall, below average performance here.

SIP Returns
Particulars 1 Year 3 Years 5 Years 10 Years
Total Amount Invested (Rs.) 1,20,000 3,60,000 6,00,000 12,00,000
Market Value of Amt Invested (Rs.) 1,06,220 3,11,233 5,84,670 16,62,497
Scheme Returns (CAGR) -20.5% -9.2% -1.0% 6.3%
Benchmark Value (Rs.) 1,14,471 3,41,150 6,44,984 18,05,192
Benchmark Returns (CAGR) -8.4% -3.5% 2.9% 7.9%
Category Average Returns (CAGR) -11.7% -5.1% 1.3% 8.3%
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Final Inference
Rolling returns of the fund are below average. Trailing returns and SIP returns have had a
serious hit in recent times. In 10 years also, the fund has been unable to beat category
average and benchmark. If we look at calendar returns, fund’s last exceptional performance
was way back in 2010. Overall, we give it 2 Red stars & 1 Yellow star here.

Fund Manager

• Returns of HDFC Equity Fund since joining of Prashant Jain (2003) = 16.1% CAGR
• Returns of Category Average since joining of Prashant Jain (2003) = 15.9% CAGR
Other Funds managed by Prashant Jain
Fund Managing Since AUM (Cr.) 3 Years 5 Years

HDFC Equity Fund Jun-2003 18,495 -2% 3%

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 HDFC Top 100 Fund Jun-2003 15,482 -1% 4%
www.MFYadnya.in

Inference
Fund is managed by celebrity and a very famous fund manager – Mr Prashant Jain. Mr.
Chirag Dagli has also joined as the fund manager from mid-2019. He is dedicated fund
manager for foreign investments. He has over 19 years of experience. Mr Jain manages the
biggest AUM as a fund manager in the Mutual Fund industry in India. He manages more
than Rs 75,000 Crore rupees. Prashant is an old timer with Mutual Fund and came in HDFC in
2002 when HDFC acquired Zurich India Mutual Fund (Was working with Zurich since early
1990s). Prashant is the CIO of HDFC Mutual Fund house. Prashant has given some
phenomenal performances in the past but off late performances have dipped and has mostly
been below category average. For being an experienced fund manager, we give a Green star
to Mr Jain.

Diversification – Sector
2% 2% 4% 3% 4%
6% 5%
4%
7% 6%
13% 13%
9% 6% 6%
13% 15%
3% 7% 8%
6% 3%
10%
6% 5%
11% 11% 10%
4% 17%
8%
13%
6%
11%
25% 27%
17% 16%
15% 9%
13%

30% 31% 33%

25% 34% 31%
26%

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Financial Energy Engineering Healthcare FMCG Technology Metals

Inference
Above graph shows how sector allocation of the fund has changed in last 10 years. Fund has
always kept maximum allocation in financial sector and currently it is 31%. So, fund is more
skewed towards financial sector but that is the trend in the category. Overall category
average allocation to financial sector is 27%. Fund has pretty high allocation of 27% to
Energy sector whereas category average is just 9%. It is highest in the category. Overall, top
3 contributes to whooping 68% which shows fund is more concentrated on its top 3 stocks.
Hence, we give it a Red star here.

Diversification – Stocks

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 Company Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun
Name 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
ICICI Bank 7.0 6.0 8.6 6.9 8.2 7.5 9.7 8.9 9.8 9.1
L&T Ltd. - 3.8 3.7 4.8 7.6 7.5 7.7 8.3 8.5 7.7
State Bank of
8.4 9.5 8.2 9.3 8.5 8.7 8.7 9.6 9.8 7.5
India
ITC 1.2 5.7 4.6 2.4 1.1 - - 3.2 3.3 6.2
Infosys 4.0 5.0 6.5 7.3 6.8 7.5 5.7 9.4 8.2 5.7
Reliance
2.9 1.1 3.0 2.1 2.0 1.3 4.0 5.5 4.9 5.6
Industries
NTPC 1.5 - - - - - 0.5 3.2 4.6 4.7
Power Grid
Corporation - - - - 0.6 1.8 2.4 2.8 1.6 4.6
of India
Coal India 3.6 1.4 1.2 - - 0.7 - - 2.6 4.3
BPCL 2.0 2.6 2.5 4.1 4.4 3.2 0.3 1.5 3.0 3.3
HDFC Bank - - - 2.1 3.1 4.8 5.2 4.9 4.3 3.2
Aurobindo
1.0 1.0 1.6 4.0 4.0 3.6 2.2 1.9 1.4 3.0
Pharma
Power
Finance 0.2 0.2 0.0 0.8 0.6 - - 0.6 3.0 2.9
Corpn
REC Ltd. - 0.9 1.6 2.0 1.1 - 1.0 1.0 2.5 2.8
Axis Bank 1.8 0.5 0.6 - 2.3 3.1 - 2.2 2.8 2.7
Ambuja
- - - - - - - - - 2.4
Cements
Tata Steel 2.3 2.9 1.1 1.2 1.2 3.3 3.1 2.0 2.0 2.4
Lupin 1.1 1.3 2.1 - - - - - - 2.3
CESC - - 2.0 2.8 1.9 2.3 2.7 2.6 1.9 2.0
GAIL (India) 1.8 0.9 0.2 0.1 - - 1.0 2.7 1.3 1.8
Total
38.6 42.8 47.4 49.8 53.2 55.3 54.2 70.2 75.7 84.1
Percentage
Total No of
Stocks in 65 61 64 52 53 51 52 49 42 41
Portfolio
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Inference
Above table shows current top 20 stocks and how their allocation has changed in last 10
years. Fund is consistently decreasing number of stocks in the portfolio each year and is
clearly becoming more focused in its stock selection approach. It can be seen from the
above table that fund does not change its portfolio too much. It shows when fund manager
buys a stock, he buys it from long term perspective. Fund is very skewed to its top 5 stocks
with more than 36% allocation to them as compared to category average of 29.8%. Also, you
will see allocation to lot of PSU stocks which is different than other Fund’s approach.

Portfolio Turnover Ratio -

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 Portfolio Turnover Ratio
100% 95% 95% www.MFYadnya.in
90%

80% 75%
70%
61%
60%
52%
51% 49%
50% 47% 48%
42% 42% 42%
40% 35% 35%
32% 33%
30% 29%
30%
23%
20% 17%

10%

0%
Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20

HDFC Equity Fund Category Average

Inference
Fund has always kept its Portfolio Turnover Ratio (PTR) lower than category average which
proves much lesser churning in portfolio and long term approach to fund selection. This
shows that fund follows a buy and hold strategy.

Final Inference
Good – Good PTR & long term approach of stock selection
Bad – Very skewed portfolio towards top 5 stocks
Overall, we give it a Yellow star on this parameter.

Expense Ratio
Direct Plan Regular Plan
1.8 www.MFYadnya.in 2.6
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1.6 2.4
1.4 2.2 2.2
1.4 1.3 2.2 2.1
1.3 1.3
1.2
1.2 2.0 2.1 2.1 1.9 1.9
1.2 1.2
1.2 2.0
1.0 1.1 1.8
1.8 1.8
1.0
0.8 1.6
Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20

HDFC Equity Fund Average HDFC Equity Fund Average

Inference
Fund’s direct expense ratio is higher than category average which is not good. Regular plan’s
ratio is below average. It is quite interesting that fund has a very high AUM, it is not
performing well, and still there was a need to further raise the Expense ratio? We give a Red
star on this.

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Risk Ratios
Beta Alpha
www.MFYadnya.in www.MFYadnya.in
8
1.2 6
4
1.1
2
1.0 0
-2
0.9
-4
0.8 -6

HDFC Equity Fund Category HDFC Equity Fund Category

Standard Deviation P E Ratio

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24% www.MFYadnya.in 40
22% 35

20% 30

18% 25
20
16%
15
14%
10
12%

HDFC Equity Fund Category Nifty 500 TRI HDFC Equity Fund Average Nifty 500 TRI

Inference
Risk Ratios of the fund – Standard Deviation and Beta, clearly shows much higher risk the
fund takes than category average and benchmark Nifty 500 TRI. This is even when fund is
majorly a Large cap oriented fund and has much higher allocation to them than category
average. Alpha (Risk adjusted return) which represents excess return shows below average
returns consistently in last 5 years. In last year, alpha had increased but again it has started
decreasing a lot. PE ratio of the fund is much below average and benchmark. Overall
currently, fund is a High Risk and Low Return fund with below average PE and therefore
deserves a Red star here.

Summary
• Fund is the 2nd biggest multi cap fund in the category
• It is a Large cap oriented Multi cap fund and majorly keeps large cap allocation above
70%. Currently it is 87%.
• Fund’s overall performance is below average only
• Fund is led by a star Fund Manager – Mr Prashant Jain for a long time now
• Fund has below average sector and stock diversification, but a good PTR
• Fund is a high risk and low return fund

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 • Fund is clearly for those who trust Mr Prashant Jain’s high risk & maverick approach
of fund management and also have a higher risk appetite.

Data Source –
Accord MF, Fund Monthly Factsheets, AMFI Data, Yadnya Research

Disclaimer
We do our best to ensure that the data we publish is complete, accurate and useful. However, because we do not create the data, and because the
processing required to make the data useful is complex, we cannot be liable for omissions or inaccuracies. The data and any related materials
contained therein are provided “as is,” without warranty of any kind, either express or implied. The entire risk of use of th e data shall be with the
user.
All in the information above is for Information purpose only. Please do not use the above information as a substitute to Investment advise and
please contact your Financial advisor for final recommendations.
Mutual Funds are subject to market risk and read the offer document in detail before investing.

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