23 Jan 2017

RETAIL RESEARCH
Concentrated and Diversified Equity Mutual Fund schemes

Top Performing Concentrated and Diversified Equity Mutual Fund Schemes:

Sr.No. Scheme Name Corpus (Rs in Total No of Top 10 3 Years 5 Years 3 Years Standard
Crs) Equity Holdings CAGR CAGR CAGR Deviation
Holdings (%) Trailing Trailing Rolling
Returns Returns returns
1 HDFC Equity Fund - (G) 15470 52.00 55.60 19.09 16.10 18.05 1.17
2 ICICI Pru Value Discovery Fund (G) 14919 42.00 60.73 26.95 22.95 28.57 0.87
3 Birla Sun Life Frontline Equity Fund (G) 13973 80.00 37.65 18.22 17.83 18.81 0.90
4 HDFC Top 200 Fund (G) 12428 66.00 46.50 17.13 14.68 15.76 1.11
5 ICICI Pru Focused Bluechip Equity Fund (G) 11636 54.00 45.20 16.54 15.91 16.74 0.90
6 SBI BlueChip Fund (G) 10104 54.00 45.59 20.11 19.25 21.42 0.87
7 Reliance Equity Opportunities Fund (G) 9419 54.00 42.83 16.85 17.06 19.19 0.97
8 Franklin India Prima Plus - (G) 9365 64.00 40.35 21.79 18.55 22.81 0.83
9 Franklin India Bluechip Fund - (G) 7634 44.00 44.78 15.84 13.85 16.07 0.84
10 Kotak Select Focus Fund (G) 7181 52.00 43.13 23.38 20.05 23.02 0.90
11 ICICI Pru Dynamic Plan (G) 5789 51.00 51.67 16.96 17.04 17.57 0.76
12 Franklin India High Growth Companies Fund (G) 5116 33.00 62.60 27.02 23.84 27.05 1.00
13 UTI-Equity Fund (G) 4828 51.00 46.91 15.97 15.73 17.95 0.89
14 UTI-Opportunities Fund (G) 4308 51.00 43.58 12.67 12.63 13.39 0.93
15 UTI-Mastershare (G) 3655 52.00 39.79 15.51 13.66 15.96 0.85
16 DSP BR Top 100 Equity Fund (G) 3368 33.00 51.59 14.76 12.53 14.03 0.99
17 Birla Sun Life Equity Fund (G) 3295 69.00 41.23 25.68 21.52 24.93 0.97
18 Franklin India Opportunities Fund - (G) 2999 44.00 42.21 21.62 16.69 21.70 0.91
19 Reliance Vision Fund - (G) 2898 28.00 67.30 20.57 14.61 20.22 1.05
20 Franklin India Flexi Cap Fund (G) 2810 48.00 46.64 20.53 17.65 22.08 0.82
21 L&T Equity Fund (G) 2771 61.00 40.47 18.40 15.27 18.50 0.94
22 Reliance Regular Savings Fund - Equity (G) 2651 49.00 38.85 19.90 16.99 20.12 1.04
23 Mirae Asset India Opportunities Fund (G) 2557 52.00 41.31 21.79 19.39 22.27 0.95
24 Reliance Top 200 Fund (G) 2338 37.00 48.48 19.31 17.22 19.45 1.02
25 Birla Sun Life Top 100 Fund (G) 2229 63.00 42.49 18.65 18.00 19.63 0.90
26 DSP BR Equity Fund (G) 2220 64.00 33.04 20.28 15.52 19.09 1.01
27 L&T India Value Fund (G) 2196 77.00 33.27 32.23 25.20 30.07 1.07
28 Birla Sun Life Advantage Fund (G) 2065 66.00 38.91 25.35 20.33 26.45 1.03
29 AXIS Equity Fund (G) 1886 34.00 54.09 12.33 14.21 14.52 0.90
30 ICICI Pru Multicap Fund - (G) 1877 46.00 39.26 21.39 18.29 21.50 0.83
31 DSP BR Focus 25 Fund (G) 1868 27.00 56.79 20.37 15.24 19.90 0.98
32 UTI-Bluechip Flexicap Fund (G) 1735 54.00 43.40 12.80 13.34 14.03 0.88
33 SBI Magnum Equity Fund (G) 1629 32.00 52.48 16.24 14.87 17.20 0.90
34 SBI Magnum Multiplier Fund (G) 1588 48.00 44.46 20.58 19.16 23.03 0.98

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35 ICICI Pru Top 100 Fund - (G) 1530 38.00 51.27 17.04 16.15 16.62 0.85
36 SBI Magnum Multicap Fund (G) 1392 65.00 38.80 24.25 20.23 24.36 0.93
37 DSP BR Opportunities Fund (G) 1326 64.00 41.27 22.49 18.89 21.20 1.05
38 HDFC Capital Builder -(G) 1300 53.00 42.24 20.51 18.45 21.02 0.99
39 Tata Equity Opportunities Fund - Regular (G) 1183 45.00 38.43 19.55 18.03 19.91 0.91
40 BNP Paribas Equity Fund (G) 1172 42.00 43.30 16.35 15.96 18.22 0.93
41 Kotak 50 (G) 1152 52.00 46.64 16.65 14.15 16.82 0.88
42 HDFC Large Cap Fund (G) 1124 21.00 74.13 10.01 11.80 9.31 0.96
43 Reliance Focused Large Cap Fund (G) 1014 24.00 52.20 14.61 15.74 16.00 0.98
44 Kotak Opportunities (G) 1004 58.00 38.41 21.60 17.94 20.30 0.92
45 HDFC Growth Fund (G) 971 44.00 51.35 17.37 13.05 15.41 1.02
46 JM Equity Fund - (G) 941 52.00 49.87 15.11 12.18 15.03 0.77
47 L&T India Special Situations Fund (G) 875 52.00 36.16 19.72 18.03 19.11 0.95
48 UTI-Top 100 Fund (G) 820 51.00 40.73 15.38 13.84 16.12 0.90
49 Tata Large Cap Fund - Regular (G) 782 40.00 50.57 13.80 14.01 14.86 0.85
50 UTI-Wealth Builder Fund (G) 748 51.00 42.86 9.85 8.52 8.41 0.59
51 ICICI Pru Select Large Cap Fund (G) 718 15.00 78.40 15.16 14.43 15.59 0.95
52 Tata Equity P/E Fund - (G) 687 41.00 51.51 29.09 20.34 25.96 0.94
53 Canara Robeco Equity Diversified (G) 685 57.00 36.57 13.57 13.35 13.67 1.01
54 Quantum Long-Term Equity Fund (G) 628 24.00 58.95 19.79 17.80 18.55 0.90
55 HSBC Equity Fund (G) 556 32.00 55.81 14.49 12.30 13.57 1.00
56 IDFC Classic Equity Fund (G) 549 61.00 45.93 15.80 15.60 14.41 0.91
57 HDFC Core & Satellite Fund (G) 543 26.00 56.45 20.93 14.14 19.48 1.06

The above consists of equity mutual schemes (large and multicap) having corpus of >Rs.500 cr and 5+ years history. Base date is Jan 19, 2017

Key observations:
Concentrated equity mutual funds are focused investment options whose portfolios are constructed with less than 30 stocks to earn greater returns at optimum level of risk. On the other ha
portfolios of diversified equity funds comprise of more than 30 stocks and upto even 90 stocks with an aim to reduce the volatility in the portfolio return.
Performance: The concentrated equity mutual funds have delivered mediocre returns (barring one or two schemes) over various time frames and relatively underperformed their counterpa
of Equity Diversified category.
Risk: The risk as measured by Standard Deviation (3 years period) for concentrated equity mutual funds is relatively higher than that of the diversified equity funds.
Funds with concentrated portfolios show higher risk and lower returns when compared to those with diversified portfolios.
In the study, 120 schemes selected from large cap and multi cap categories were classified into 4 portfolio buckets of 30 schemes each. Viz: Up to 30 stocks, 31-42 stocks, 43-52 stocks and
87 stocks.
Funds which had a portfolio of 43-52 stocks and 53-87 stocks gave higher returns with lower risk (standard deviation) than those which had a portfolio of 31-42 stocks and 43-52 stocks.
Conclusion is that diversified equity funds (multi cap) have the potential to generate higher returns with lower risk then concentrated funds (large Cap).

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Returns(% p.a. - CAGR)

Parameter Returns Upto 30 31-42 43-52 53-87
stocks stocks stocks stocks
Average 5 yr trailing 14.03 14.99 15.52 17.07
Average 3 yr trailing 17.47 16.59 17.58 19.28
Median 5 yr trailing 14.43 14.76 15.45 17.45
Median 3 yr trailing 16.91 14.76 16.80 18.52
Average 3 yr rolling 16.57 16.96 17.87 19.57
Median 3 yr rolling 16.00 15.52 17.46 19.14
Risk (SD) 0.97 0.94 0.90 0.94

Different funds use different investment strategies for generating risk-adjusted returns.

Funds using concentrated portfolio.

Benefits:
Invest after thorough research in high conviction sectors and stocks
Focussed approach
Lower portfolio turnover as number of stocks are less and exposure per stock is higher.
More risk and probability of earning higher returns

Funds using Diversified portfolio.

Benefits:
Invest in a broad range of sectors and stocks
Individual stock exposure is controlled leading to greater risk control
Higher portfolio turnover as number of stocks are more and exposure per stock is lower.
Lesser risk and probability of earning moderate returns

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Senior Analyst: Prashant Mehta (prashant.mehta@hdfcsec.com)

RETAIL RESEARCH Tel: (022) 3075 3400 Fax: (022) 2496 5066 Corporate Office

HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022)
2496 5066 Website: www.hdfcsec.com Email: hdfcsecretailresearch@hdfcsec.com

Disclaimer: Mutual Funds and Debt investments are subject to risk. Past performance is no guarantee for future performance this document has been prepared by HDFC Securities Limited and is meant for sole
use by the recipient and not for circulation. This document is not to be reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security.
The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We may have from time to time positions or options
on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended for
non-Institutional Clients

This report has been prepared by the Retail Research team of HDFC Securities Ltd. The views, opinions, estimates, ratings, target price, entry prices and/or other parameters mentioned in this document may or
may not match or may be contrary with those of the other Research teams (Institutional, PCG) of HDFC Securities Ltd. HDFC Securities Ltd. is a SEBI Registered Research Analyst having registration no.
INH000002475."

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