HDFC Top 100 Fund Review: should you exit or hold on?

Published: August 23, 2020 at 11:52 am

Last Updated on July 10, 2022 at 8:18 am

This is a performance review of HDFC Top 100 Fund. We ask if existing investors should exit the fund because of its recent poor performance or hold on, wait for the market imbalance to reduce and give Prashant Jain some more time to turn things around.

The world of mutual fund investing changes so fast that Prashant Jain’s track record of excellence is largely unknown to the huge number of young mutual fund investor who started just a couple of years ago. To anyone who started investing in mutual funds in the early 2010s or earlier Mr. Jain or his funds need no introduction- HDFC Equity, HDFC Top 200 (before it became Top 100) or HDFC Prudence (before it became Balanced Advantage).

History of HDFC Top 100: ITC Threadneedle Top 200 was launched in late 1996. It changed hands in 1999 and became Zurich India Top 200 Fund with Bobby Surendranath as the manager. Mr Jain took over in 2001 and has remained the fund manager ever since. HDFC acquired Zurich AMC assets in 2003 and the fund became HDFC Top 200.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

To comply with SEBI mutual fund categorization rules, the fund (already a large cap oriented by then) became HDFC Top 100 Fund. HDFC Equity had a different route: from Centurion AMC to Zurich to HDFC.  A quote used in the review of HDFC Equity is worth reproducing here.

Way back in 1991, when I started my career, there was no screen-based trading; there were no mobile phones. While travelling, we would stop at a public call booth to check on the markets. Research from brokerages was less and information gathering itself was a major activity. I remember we had tied up with a few scrap paper dealers to sell annual reports to us by the kilo. No company visited us in our office except at the time of public issues. There was no investor relations role in companies. There were no star ratings done on mutual funds. Airfares were less affordable and we were advised to keep travel to a minimum, unlike today, when people have to be prodded to travel more. – Prashant Jain

In 1991 this author was still a year from finishing school. Mr Jain’s track record and extraordinary achievements over the years are not to be trifled with. That said, ultimately the investor wants performance for the additional fee paid. That is where it becomes a tough emotional choice for the investor.

HDFC Top 100 Fund vs Sensex TRI

Let us start with the since inception performance. It is nothing short of astounding. The fund benchmark was BSE 200 (until it was replaced by Nifty 100) but Sensex TRI was the only data source available with history as long as the fund! Since these indices are market-cap weighted the return difference would be insignificant for our current purpose.

Since inception performance of HDFC Top 100 Fund compared with Sensex TRI (Sep 1996 to Aug 2020)
Since inception performance of HDFC Top 100 Fund compared with Sensex TRI (Sep 1996 to Aug 2020)

From 1996 to 2008-ish the fund has no trouble beating Sensex. Someone who started investing in the fund immediately after the 2008 crash should still be reasonably satisfied with its performance.

Aug 2008 to Aug 2020 performance of HDFC Top 100 Fund compared with Sensex TRI
Aug 2008 to Aug 2020 performance of HDFC Top 100 Fund compared with Sensex TRI

Unfortunately, this has been the story of the fund for at least the last ten years!

Aug 2010 to Aug 2020 performance of HDFC Top 100 Fund compared with Sensex TRI
Aug 2010 to Aug 2020 performance of HDFC Top 100 Fund compared with Sensex TRI

HDFC TOP 100 Rolling Returns

A study of every possible 7, 10 and 15 years since inception can often be illuminating. For the most part of the fund’s history, investors had to pay a steep entry load (which is a straightforward commission payout rather than the current deceptive trail model – thanks to a regulator that worries more about increasing traction for a product than investor education. Direct plans were introduced as compensation).

So the returns that you see (including the SIP table) are before the entry load. They represent fund manager returns and not investor returns. Also, we shall be using the regular plan. The direct investor has also suffered but a touch less.

Seven year Rolling returns of HDFC Top 100 Fund compared with Sensex TRI
Seven-year Rolling returns of HDFC Top 100 Fund compared with Sensex TRI
Ten year Rolling returns of HDFC Top 100 Fund compared with Sensex TRI
Ten-year Rolling returns of HDFC Top 100 Fund compared with Sensex TRI
Fifteen year Rolling returns of HDFC Top 100 Fund compared with Sensex TRI
Fifteen year Rolling returns of HDFC Top 100 Fund compared with Sensex TRI

The dramatic drop in outperformance is evident especially in the 10 and 15-year rolling returns. There is only one question that existing investors will have to answer as discussed below. I am assuming new investors will simply not touch this fund.

HDFC Top 100 SIP Performance

The table does look awful. However please keep in mind, if the fund’s NAV did not move up in the recent past as much as it did in the distant past then lump sum (above) or SIP, returns would be bad. We saw this recently: What I learnt from an 11-year SIP in a midcap fund

Trailing SIP TenureHDFC Top 100 Fund(G)S&P BSE SENSEX – TRI

What should investors do? Exit or hold on?

Existing investors only need to answer this single question: The rolling returns chart show a gradual decrease in outperformance, dropping to zero from 2018 onwards. Assuming this is because of a market imbalance (see references below) will the fund manager bounce back and provide at least a fraction of past outperformance with the economy starts moving again? If yes, can my goal wait that long?

If the answer to one or both questions is ‘no’ then you will need to exit the fund. Else you can hold on but it can excruciatingly frustrating. “Exit and invest where?” is a natural question. Index funds seem like an obvious choice, but that requires a special kind of mindset and is not for everyone. If you do not want index funds then you can consider hybrid funds – aggressive hybrid or balanced advantage.


  1. Return difference of Nifty 50 vs Nifty 50 Equal-weight index at an all-time high!
  2. Is this market rally bad for equity mutual funds (active/passive)?
  3. Do index fund returns depend upon just a few stocks (Concentration risk)?
Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.
🔥Now Watch Let's Get Rich With Pattu தமிழில் (in Tamil)! 🔥
  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter using the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

About The Author

Pattabiraman editor freefincalDr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl-version covers of "Chinchu Gets a superpower".
Most investor problems can be traced to a lack of informed decision-making. We made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So, in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it, as well as teaching him several key ideas of decision-making and money management, is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)