HDFC Top 100 Fund

ISIN INF179K01YV8

Overall analysis 

3-yr rolling excess returns is in the range of 4-8%. Tracking error against benchmark has been in the range of 3-7% overall and the funds’ performance in the short run has been good. The fund had given the maximum excess return in comparison to its peers and went upwards first quartile over the past 1 year.

Performance analysis 

Rolling returns in quartiles

The rolling return chart shows excess 3-year annualised returns in context of peer return quartiles. The blue line’s time above the third green median line indicates the fund’s better than median performance.

The rolling return of the fund was above the third green median line but in between December2019 to December2022 it came down and again gone up in September 2022 which means it is better than median performance.

Rolling risk/return (Snail-trail) 

The rolling risk/return chart shows excess 3-year annualised returns relative to the index. The top left quadrant would indicate higher returns with lower volatility than index.

This fund has shown good 3-year excess returns, touching 4.90% per annum and a significant time around the 0-2% pa, whilst lower than index volatility of 2-3% pa. However, the excess return came down to around -5.57% towards the end of 2021.

Tracking error

The tracking error chart shows how the fund ‘tracks’ against the index. The higher the TE, the more active the fund’s return has been, with the 2-4% range considered to be barely active, 4-6% range considered to be reasonably active and anything higher attributed to concentrated/focused funds. Funds with TE of less than 2% can be considered to be closet indexers.

The tracking error was always above 2% which means it is active all the time but it has also gone 7.5% which means it was too active but now it has come down to 3.5% which means it is barely active.

Information ratio

The information ratio is a measure of ‘risk-adjusted return’ as it’s the excess return per unit of excess volatility. Active funds should have IR of higher than 1, ideally higher than 1.3 at least to indicate skill. 

The information ratio of the fund was above 1.5 in June 2016-june 2017 but it came down to -4.5 in June 2020 and now in June 2023 1.7 which is good.

Portfolio analysis

Stock style chart

Morningstar’s stock style chart shows the ‘style’ of the stocks in the portfolio in terms of size and value/growth style. The centroid shows the weighted average while the zone circle shows how varied the stock styles are.

The style chart of the fund shows that the fund is typically in the growth segment.

Factor profile chart

Morningstar’s factor profile shows the historical style analysis of the stocks in the portfolio in terms of size, value/growth style and other key factors. The blue circle shows the fund relative to the black dot for the category average.

The factor profile chart of the fund shows the yield is low, momentum & quality is moderate whereas volatility & liquidity is low and size is large of the fund looking at the last 5 yrs historical range.

Prepared by – Shreyas Walve, August 2023