HDFC Equity Fund

The largest Indian equity fund is also the top-of-mind recall for most investors seeking managed equity exposure. The fund has made a strong comeback in the last one year, with a return of 60 per cent, after a sluggish show last year.

Strategy: Despite its big asset base of Rs 16,239 crore (Sep 2014), this is no index hugger. While 65-70 per cent of the portfolio has been in large-caps in the last year or two, a fourth of assets are devoted to mid-caps and 4-5 per cent is parked in small-caps too. The fund is aggressively managed and remains fully invested across market cycles. It is high on conviction with its top stocks making up a third of the portfolio. The fund does not get swayed by market fancies and usually sticks to stock and sector choices. The fund management team has been exceptionally stable with only three changes since 1994.

Performance: HDFC Equity has stood the test of time across four market cycles. Such is the popularity of this multicap fund that even a small drop in its ratings causes great anxiety. The fund has been through a difficult patch in the years from 2011 to 2013, lagging the category average in 2013. But the sharp improvement in the fund's returns in the ongoing rally has helped re-establish it as a bull market specialist. The fund's 5 year and 10-year records remain very strong with CAGRs of 14.8 per cent and 22.9 per cent respectively. Its ten year return surpasses the benchmark by 7.5 per cent and the category average by 4 per cent.

What we don't like: Its recent comeback proves that size isn't a barrier to its performance. But size does make it harder for this fund to play the best opportunities in the mid or small-cap space.

Why Invest? There are very few equity funds out there which have delivered the goods in every bull market over the last twenty years and have been steered by the same management team; this is one, so buy it.