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HDFC Premier Multicap: Fund Analysis
Wed, Aug 24, 2016
Source : Yash Jashnani, Citrus Interactive

HDFC Premiere Multi-Cap Fund is an open ended multi cap equity diversified Fund. The primary objective of the scheme is to generate capital appreciation in the long term through equity investments by investing in a diversified portfolio of mid Cap and large cap bluechip companies. It is benchmarked against NIFTY 500. The fund has an AUM of Rs 290 crore as on 31st July 2016 which has decreased by Rs 42 crore as compared to last year 31st July 2015.

 

 

Performance

 

The fund has beaten its benchmark in the 6 Month, 3 Years and Since Inception period but has not beaten its benchmark in YTD, 1 Year and 5 Year period. It has not beaten its category average in the YTD, 1 Year, 3 Year and 5 Year period except the 6 months.

 

Scheme Name

YTD

6 Months

1 Year

3 Years

5 Years

Since Inception

HDFC Premiere Multi-Cap  Fund

2.29

16.16

-3.09

23.89

8.25

13.97

 NIFTY 500

9

15.63

3.15

18.75

10.61

13.17

Category Average

8.92

16.09

4.15

26.45

15.12

NA

Rank

160/163

73/163

154/159

78/146

135/138

NA

Figures are in % as on 31st July 2016; Returns above 1 year in Compounded Annual Growth Rate (CAGR)

 

In terms of the calendar year returns the fund has beaten its benchmark in 2011 and 2014 but has not beaten its benchmark in 2012, 2013 and 2015. It has beaten the equity diversified category in 2011 but has not beaten the equity diversified category in 2012, 2013, 2014 and 2015 compared to its category average as shown in the table below.

 

Scheme Name

2011

2012

2013

2014

2015

HDFC Premiere Multi-Cap  Fund

-22.6

19.5

-0.11

52.07

-1.21

 NIFTY 500

-27.19

31.84

3.61

37.82

-0.72

Category Average

-23.92

34.25

5.43

54.21

3.76

Rank

50/134

139/140

122/144

63/147

127/156

All figures in %

 

Risk: In terms of measures of risk such as Standard Deviation and Beta (measured over the last 3 years), the fund has taken higher risk compared to category median.

 

 

Standard Deviation

Beta

HDFC Premiere Multi-Cap  Fund

1.22

1.08

Category Median

0.98

0.89

 

 

Risk-Adjusted Return: In terms of Treynor ratio (measured over the last 3 years), the fund has proved higher risk-adjusted returns than the category median and in terms of Sharpe the fund has proved lower risk-adjusted returns compared to the category median.

 

 

 

Treynor

Sharpe

HDFC Premiere Multi-Cap  Fund

0.84

0.07

Category Median

0.09

0.08

 

 

Portfolio

Sector concentration: The fund’s concentration in the Top 3, Top 5 and Top 10 sectors is higher than the category median.

 

 

Top 3

Top 5

Top 10

HDFC Premiere Multi-Cap  Fund

37.4

53.42

72.32

Category Median

35.08

46.85

67.15

 

 

 

Company concentration: The fund’s concentration in the Top 3, Top 5 and Top 10 Companies is higher than the category median.

 

 

Top 3

Top 5

Top 10

HDFC Premiere Multi-Cap  Fund

19.22

28.55

47.77

Category Median

16.98

25.48

41.27

 

 

Number of Equity Holdings:

The Fund currently holds 28 stocks in its portfolio (31st July 2016), which is lower than the median stock count for the equity diversified category, which currently stands at 46. In the last 5 years the number of equity holding averages to 35.

 

Cash Equivalent:

Its cash equivalent for July was 4.89 per cent. The average cash allocation for the last five years is 3.76 per cent. Its maximum allocation to cash over the last two years is 9.94 percent in January 2014 and lowest was 0.42 percent in June 2016. In 2016 it had an average cash allocation of 1.82 per cent.

 

Portfolio Characteristics:

The Top 5 sectors include Bank-Public, Bank – Private, Engineering – Construction, IT – Software and Electric Equipment.

 

In the last 6 months the Fund has not bought any stocks, but the stocks of Birla Corporation Ltd, Dynamic Technologies Ltd and Elecon Engineering Company Ltd. have been dropped from its portfolio.

 

Process

 

The scheme would invest 85%-100% in Equity and Equity Related instruments out of which 35%-65% would be invested in large caps and 35%-65% will be invested in mid caps.

The scheme would invest 0-15% in Debt Securities including securitized debt of upto 10% of the net assets.

The scheme would invest 0-15% in Money Market instruments, it will also invest 25% of its net asssets in ADR’s/GDR’s and foreign securities. The scheme will invest 10% of its assets in Foreign Debt Securities.

As the name suggests, the Scheme will invest predominantly in 'premier' or 'blue chip' companies. A premier or blue chip company is typically a company with a successful track record, has reasonable competitive advantages in its business and has an able management. The strategy is to invest a minimum of 35% of the Scheme each in Large Caps and in Mid Caps. The balance of the Scheme will be a 'swing portfolio' that can invest in either Mid Caps or Large Caps. The allocation of the swing portion between Large Caps and Mid Caps will be a function of the relative valuations of Large Caps vs Mid Caps.

 

In order to implement the investment approach effectively, it would be important to periodically meet the management face to face. This would provide an understanding of their broad vision and commitment to the long-term business objectives.

 

Fund Manager

 

Rakesh Vyas:

 

Mr. Rakesh Vyas is a dedicated Fund Manager for Overseas Investment at HDFC Asset Management Company Ltd. He joined the firm in October 2009. He has an experience over 11 years of which 3 years in Application Engineering (Control & Automation) and 8 years in equity research. Mr. Vyas manages HDFC Annual Interval Fund, HDFC Arbitrage Fund HDFC Balanced Fund, HDFC Banking and PSU Debt Fund, HDFC Capital Builder Fund, HDFC Capital Protection Oriented Fund HDFC Cash Management Fund, HDFC Children’s Gift Fund, HDFC Core & Satellite Fund, HDFC Corporate Debt Opportunities Fund, HDFC Dual Advantage Fund HDFC Equity Fund, HDFC Equity Savings Fund, HDFC Floating Rate Income Fund, HDFC Growth Fund, HDFC High Interest Fund - Short Term Plan, HDFC High Interest Fund - Dynamic Plan, HDFC Income Fund, HDFC Infrastructure Fund, HDFC Large Cap Fund, HDFC Liquid Fund, HDFC Long Term Advantage Fund, HDFC Medium Term Opportunities Fund, HDFC MF Monthly Income Plan, HDFC Mid - Cap Opportunities Fund, HDFC Multiple Yield Fund - Plan 2005,HDFC Premier Multi-Cap Fund, HDFC Prudence Fund, HDFC Retirement Savings Fund, HDFC Short Term Opportunities Fund, HDFC Short Term Plan, HDFC Small & Mid Cap Fund, HDFC TaxSaver, HDFC Fixed Maturity Plans. Mr. Vyas holds a PGDBM from XLRI Jamshedpur in 2006 and a BE degree in Electrical Engineering.

 

Vinay R. Kulkarni:

 

Mr. Vinay R. Kulkarni serves as a Senior Fund Manager of Equities at HDFC Asset Management Company Ltd. Mr. Kulkarni joined HDFC Asset Management Company Ltd. on November 3, 2006. He serves as Portfolio Manager/Fund Manager of various HDFC Mutual Funds. He has been Fund Manager at HDFC Mutual Fund - HDFC Capital Protection Oriented Fund - Series III , HDFC CPO-III- 1100D October, HDFC Capital Protection Oriented Fund - Series III - 1207D since December 2014 and HDFC Dual Advantage Fund - Series I, HDFC DAF - I - 1100D since August 2015.

 

He has had an extensive experience in fund management and the IT industry. Mr. Kulkarni holds a Post Graduate Diploma in Management from the Indian Institute of Management Bangalore and a B.Tech degree from the Indian Institute of Technology, Mumbai.

 

 

View

 

HDFC Premier Multicap Fund holds a concentrated portfolio – which increases the risk and volatility. The performance is likely to dip if one of the significant bets goes wrong. There has been a pick up in the fund performance in the last 6 months. Investors should watch the performance for a bit longer to see if this is a sustainable trend.

 
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