Fidelity Equity Fund - HOLD
Dear all,
Fidelity Equity Fund is "go anywhere" fund. The scheme endeavours to invest across the market capitalisation range, and seeks to identify trends ahead of the markets to generate returns. The scheme follows a bottom up approach towards stock selection, and looks to include a number of stocks in the portfolio to mitigate risk, which maybe as many as 75 stocks in a month as per the offer document.
Fidelity Equity Fund with average Assets Under Management (AUM) at around 1982 crores is among the Largest Funds in the Indian Mutual Fund Industry. It has been a steady performer since inception. It has always been in the top quartile within Diversified Funds category. Its 1 year performance has been, as you can expect, nothing to rave about. It is down by 51% but better than the Category Average of -56%.
The Fund has had a policy of having 60-80 stocks in its portfolio since inception. While many feel that this may result in overdiversification, what is noteworthy is that the fund is concentrated enough in large cap with large cap accounting for more than 65% of its portfolio and with no single stock exceeding 5 per cent except for Reliance at 7%.
Its top ten holdings are
Reliance Industries 7.34
SBI 4.56
HDFC 4.19
Infosys Technologies 3.95
B H E L 3.72
Bharti Airtel 3.34
ICICI Bank 3.10
I T C 3.04
Hindustan Unilever 3.04
Cipla 2.87
The diversified investment strategy is reflected in its sector allocation as well, with the top three sectors accounting for a little more than a third of the portfolio. Holdings in each sector include 7-8 stocks. Fidelity Equity aims to focus on companies that are in an investment phase, that are set to benefit from domestic consumption and those businesses that are internationally scalable. Going by the quarterly and half-yearly disclosures, the fund seems to have consistent investment views.
Going by the portfolio and its investment strategy, the fund appears to be conservative and well suited to risk-averse investors. The diversified spread appears to have come in handy during highly volatile market phases, including the recent one.
In recent months, despite the widening valuation gap between large- and mid-caps, mid-cap allocation has remained at about 25 per cent. This large-cap bias may have reduced the fund’s vulnerability to the recent market meltdown. Banking occupies the top slot in the portfoliothe fund has had a bias towards banking since the time of its launch, expecting the sector to benefit from the ongoing capex of Indian companies. In recent times as well, despite fears in the market that hikes in interest rates would hurt profitability, banking continues to be the top sector in its portfolio.
Fidelity Equity Fund has since its inception been my favourite. I recommend you to HOLD the fund, if you do not own, you sure should add the fund to your portfolio. The fund should outperform its Benchmark comfortably in coming years.
Best of luck,
Srikanth Shankar Matrubai,
Bangalore
Also visit http://equityadvise.blogspot.com for an indepth Equity Analysis
Srikanth Matrubai is known as the WEALTH ARCHITECT. He is practitioner of Wealthy Habits and author of Amazon Best Selling Book DON'T RETIRE RICH. We strongly urge to follow your Advisor. This blog is purely for information. However, we strongly suggest you to consult a Financial adviser. This blog is purely for information purposes only and we do not take any responsibility whatsoever as the blog content may be changed from time to time and is generic in nature.
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