May 23, 2018 3 min read

HDFC Top 200 Fund Is Now HDFC Top 100 Fund. What Has Changed for Investors?

Read this blog to find out about the changes occurred in HDFC Top 200 Fund and also learn how it can affect you as an investor.
Recently, HDFC announced its first set of changes in the equity schemes which are in-line with SEBI’s new categorization and rationalization rules. The AMC has decided a new name for the scheme, thus converting HDFC Top 200 Fund to HDFC Top 100 Fund which will now be focused on large-cap companies only.

The changes will be effective from today. So, is there something to worry about? Should you prefer staying invested or moving on during the exit-load free period? Let’s find out what our experts believe.

What Changes Can be Seen in HDFC Top 200 Fund?

Considering the prior investment strategy of the scheme, almost 10 percent of its stocks were allocated in mid-caps. However, after the change in the fundamental attributes of the fund, the scheme will be focused on large-caps. As according to new SEBI’s guidelines, a large-cap scheme would be mandated to invest minimum 80 percent in equity and equity-related instruments. The fund can invest the remaining 20% in debt securities, money-market instruments, non-convertible preference shares, and units issued by REITs and InvITs.

Should You Prefer Remaining Invested in this Scheme?

If you have invested in HDFC Top 200 Fund and find it to be a good scheme considering your objectives, then you should remain invested. However, if you are someone who is looking for fresh investments in a large-cap scheme, then we suggest you to go with some other lucrative options available in the market. Reason being that from the last few years it’s seen that the fund hasn’t performed well and this has directly affected the AUM of the scheme which didn’t spike much in the recent bull run. The far better results were depicted in the recovery phase after the crash in 2008. Several investors blame the fund manager Mr. Prashanth Jain for his unusual stock-picking skills.

Now, the point is whether to remain invested or exit the scheme. Considering the past portfolio of the fund, the scheme had 51 stocks from Nifty Top 100 and only a few stocks from somewhere else. Earlier BSE 100 Tri was used as its benchmark to evaluate its performance. After the change in categorization, the new benchmark will be Nifty 100 Index.

So, it should be noted that there will be no major shift after the change of the scheme from HDFC Top 200 Fund to HDFC Top 100 Fund.

Will There be Any Change in the Risk Ratios?

The HDFC Top 200 Fund has not been able to perform well in the past few years. When compared to Nifty 100 or Nifty 200, it has not been able to beat either of them despite being more volatile. Now, as it has adopted a new avatar as HDFC Top 100 Fund, the volatility factor has decreased to an extent. But still it attracts higher risk, and the fact that it has not been able to showcase attractive results in the last 2.5 years is not something that one should ignore completely.

The Bottom Line

As we have understood that HDFC Top 200 is already a scheme which belongs to large-cap tilt. Therefore, its change to HDFC Top 100 will not be a cause for alarm. Thus, the investors who have put their faith in it should continue to do so as there is no reason to exit.

The two crucial factors that should be overlooked are:

  • The fund is volatile
  • It is currently going through a rough patch.

But, as an investor in mutual funds, you know that these things are temporary. Anyway, if you’ve made your mind to exit, you can do so practically free from LTCG tax now. Again, if you’re someone who hasn’t invested in this fund for asset allocation purposes, then also there is no reason for you to switch. For more advice on the same, connect with the experts associated with MySIPonline. We are always here to serve you will all our might.

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