The Hindu Business Line : HDFC Capital Builder: Invest

AN investment can be considered in HDFC Capital Builder. The fund's portfolio sports a number of mid-cap stocks, which enhances its risk profile when compared to a typical diversified fund. Investors looking at increasing their exposure to mid-cap stocks may consider the fund a diversification option. Investments can be made in phases, to reduce the risk of bad timing. It would also avoid exposing a substantial sum to market volatility.

The fund has been a strong performer since late 2003, when it changed its strategy from investing in defensive plays and began to include more mid-caps and cyclical stocks in its portfolio.

Over the past year, it has delivered a return of close to 80 per cent, beating the benchmark indices. The return is also well above that of the average 63 per cent that diversified equity funds have delivered over this period. With an annualised return over a three-year period of about 65 per cent, the fund has a good track record, although its performance before 2003 is not relevant given the change in its attributes.

A little more than 50 per cent of its assets is now invested in mid-cap stocks or stocks with a market capitalisation of less than Rs 2,000 crore. This is a substantial allocation, but is not as large as some of the other diversified equity funds that have made it to the top of the performance charts.

The diversified nature of its portfolio reduces some of the risks associated with investing in the fund. About 50 stocks make up its portfolio, with no single stock exceeding six per cent.

Extreme volatility in any particular stock is unlikely to influence its overall performance. The top ten stocks account for about 40 per cent of its assets.

Its investments are also spread across sectors. Barring the metals sector, which accounts for about 15 per cent of its assets, no sector accounts for more than 10 per cent of its assets.

A few offbeat stocks, such as Balkrishna Industries, Man Industries, Kajaria Ceramics, VIP Industries, Vimta Labs and Kopran, figure prominently in its portfolio.

Fund facts: HDFC Capital Builder was launched in 1993. It has an asset base of Rs 980 crore. The current NAV of the growth option is Rs 48.8. The minimum investment amount is Rs 5,000. Dividend and growth options are available.

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