The Hindu Business Line : HDFC Long Term Advantage: Buy

INVESTORS can consider exposures in HDFC Long Term Advantage, as it remains one of the more consistent performers among equity funds. An investment in this fund will qualify for deduction under Section 80-C of the Income-Tax Act. There will, however, be a three-year lock-in period. .

As it has an impressive track record, investors who are not seeking tax-saving exposures could also consider adding this HDFC Long Term Advantage to a portfolio of funds. Investors could phase out their exposures using a systematic investment plan covering a six-to-twelve month period. This will provide entry at several price points and enable investors to capitalise on any weakness in the broad market.

If investors are focused on exposures in tax-saving funds that qualify for investment limit of a lakh of rupees, our order of choices will be HDFC TaxSaver, Magnum TaxGain (a relatively more aggressively managed fund with a higher risk profile) and HDFC Long Term Advantage. These funds have benefited from a focused approach of investing in mid-cap stocks, which have enjoyed several bouts of re-rating over the past few years.

HDFC Long Term Advantage also benefited from investing in offbeat themes that subsequently acquired market fancy. At this stage of a protracted bull market, this element is, not surprisingly, missing. Its portfolio is akin to several diversified funds and it is tough to spot offbeat themes. Stocks from the consumer, engineering and auto component sectors are the preferred choices. The fund has also acquired a greater large-cap tilt in recent months. Such stocks account for about 40 per cent of assets now and quite a few also figure in the top ten holdings. This strategy is likely to prove useful, as equities go through a choppy period.

The fund continues show faith in stocks such as Goodlass Nerolac, Great Eastern Shipping, Carborundum Universal, Orient Abrasives and Balkrishna Industries, which have been an integral part of the portfolio for a long period now. In a few stocks, such as Thermax, Shanthi Gears and Alfa Laval, which enjoyed a similar status, it has cut its exposure levels.

In the large-cap space, the fund favoured picks have been Reliance Industries, SBI and Container Corporation of India.

There has been a rapid rise in the fund's asset base. Over the past 18 months, the assets under management have risen almost eight-fold, to about Rs 220 crore. The asset base is small enough to afford a high degree of flexibility in management and this is an added positive.

Fund facts: The fund was launched as HDFC Tax Plan 2000 and subsequently renamed. The minimum investment is Rs 500.

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