HDFC Top 100: One of the biggest wealth creator large cap fund

HDFC Top 100 Fund is one of the oldest large cap funds with a track record of nearly 27 years. Large cap funds are among the most popular mutual fund categories. Though from time to time midcap and small cap funds attract a lot of investor interest, large cap or large cap oriented funds usually form the core of investor portfolios. As per SEBI, the 100 largest companies by market capitalization are classified as large cap. These companies are household names and are often the market leader in their respective industry segments. Large cap funds are required to invest at least 80% of their assets in large cap stocks.

Wealth creation track record

HDFC Top 100 Fund was launched in October 1996 and has a stellar wealth creation track record. Rs 10,000 invested in the fund at the time of its inception would have grown to more than Rs 10.31 lakhs as on 31^st October 2023 (see the chart below) i.e. more than 100X growth in last 27 years. The CAGR returns since inception of the fund is 18.7%.

Source: Advisorkhoj Research, as on 31^st October 2023. Disclaimer: Past performance may or may not be sustained in the future

The Systematic Investment Plan (SIP) return of the fund is also a great wealth creation story. If you had invested Rs 10,000 per month (cumulative investment of Rs 32.5 lakhs) in the HDFC Top 100 Fund through a hypothetical SIP you could have accumulated Rs 6.6 crores as on 31^st October 2023. The SIP XIRR since inception is around 18.24% (as 31^st October 2023).

Source: Advisorkhoj Research, as on 31^st October 2023. Disclaimer: Past performance may or may not be sustained in the future

Outperformed the benchmark by big margin

The chart below shows the growth of Rs 10,000 investment in HDFC Top 100 Fund versus the benchmark Nifty 100 TRI since 1^st January 2003. Even though HDFC Top 100 Fund was launched earlier, we are starting with 1^st January 2003 since Nifty 100 Total Return Index was launched in 2003. HDFC Top 100 Fund was able to create nearly 2X wealth compared to the benchmark index- Rs 4.87 lakhs versus Rs 2.56 lakhs. This visual of the chart may create an impression that Nifty 500 TRI did not perform well in this period. If you do the math, you will see that Nifty 100 TRI did extremely well, giving 16.8% CAGR returns; it is just that the CAGR return of HDFC Top 100 Fund was outstanding at 20.5%. You can see the power of compounding over long investment tenures in action here; a3.7% difference in CAGR returns in the last 20 years created nearly 2 times more wealth.

Source: Advisorkhoj Research, as on 31^st October 2023. Disclaimer: Past performance may or may not be sustained in the future

Outperformance in SIP Returns

We saw in the previous section that HDFC Top 100 outperformed the benchmark index in point to point returns by a big margin over long investment horizon. Similar outperformance was seen in SIP performance also. The chart below shows the growth of Rs 10,000 monthly SIP in HDFC Top 100 Fund versus Nifty 100 TRI since 1^st January 2003.

Source: Advisorkhoj Research, as on 31^st October 2023. Disclaimer: Past performance may or may not be sustained in the future

Outperformance across different investment tenures

The chart below shows the CAGR returns of the fund versus its benchmark index, Nifty 100 TRI over different investment tenures ending 31^st October 2023. You can see that the scheme outperformed the benchmark across different time-scales.

Source: Advisorkhoj Research, as on 31^st October 2023. Returns over investment periods exceeding 1 year are in CAGR. Disclaimer: Past performance may or may not be sustained in the future

Rolling Returns

Some investors argue that point to point returns are biased by the performance of a fund in prevailing market conditions. To avoid that bias we are comparing the 3 year rolling returns (rolled daily) of HDFC Top 100 Fund versus the benchmark index Nifty 100 TRI since 1^st January 2003. We have chosen 3 year rolling period because investors should have minimum 3 year investment tenures for equity funds. You can see that the fund outperformed the benchmark index with fairly high degree of consistency (see the chart below). You can also see that the fund was able to provide give 12%+ and 15%+ returns more consistently than the benchmark index.

Source: Advisorkhoj Research, as on 31^st October 2023. Period: 1/1/2003 to 31/10/2023. Disclaimer: Past performance may or may not be sustained in the future

The rolling returns outperformance consistency of HDFC Top 100 Fund is testimony of the quality of fund management. Long continuity of the fund manager and stock selection strategy are, in our opinion, the most important factors for the outstanding performance of this fund.

Longer investment tenures can give superior investment outcomes

We calculated the rolling returns of HDFC Top 100 Fund since the fund’s inception over different investment tenures (rolled daily). You can see that while average rolling returns are nearly the same the probability of getting 12%+ CAGR returns increases as we increase the investment tenure. If you increase your investment tenure, you will not be affected by the impact of market cycles on your investment.

Source: Advisorkhoj Research, as on 31^st October 2023. Period: 11/10/1996 to 31/10/2023. Disclaimer: Past performance may or may not be sustained in the future

Bounce back in performance

The chart below shows the quartile performance of HDFC Top 100 Fund relative to its peers in the Flexicap category on an annual basis over the last 10 years or so. The boxes in shades of green denote ranking in the top 2 quartiles, while the boxes in shades of red denote ranking in the bottom 2 quartiles. The bounce back of HDFC Top 100 Fund’s performance from red to green in the chart below tells you that a fund manager’s strategy may underperform in certain market conditions. However if you have long investment tenures, you give your fund the time it requires to bounce back and create returns for you.

Source: Advisorkhoj Research, as on 31^st October 2023. Disclaimer: Past performance may or may not be sustained in the future

About HDFC Top 100 Fund

The fund was launched in October 1996 and is one of the most popular actively managed equity funds in India, with AUM of over Rs 25,773 Crore (as on 31^st October 2023). The total expense ratio (TER) of the scheme is 1.69%. The fund invests across market cap segments and industry sectors. Rahul Baijal is the fund manager of this scheme.

3 pronged framework for stock selection

Why invest in Large Cap?

• Proven business models


• Stability across business cycles


• Benefits of scale


• Management bandwidth is wide and deep


• Higher liquidity than mid and small caps


• Well researched universe

Why invest in HDFC Top 100 Fund?

• From a long term perspective, the growth outlook for Indian equities is extremely positive. Indian economy is in a structural up cycle. Corporate and bank balance sheets are now in best possible shape to drive capex and credit growth.


• Favourable demographics, rising affluence, shift from unorganized sectors to organized and benefits accruing out of global supply chain realignment e.g. China + 1 will be beneficial for Indian equities


• HDFC Top 100 Fund has a strong track record of wealth creation across investment cycles. The investment strategy of the fund has created alphas for investors over long investment horizons.

Who should invest in HDFC Top 100 Fund?

• Investors looking for capital appreciation over long-term investment horizon


• Investors with high risk appetites


• Investors with minimum 5 years investment tenures


• This fund can be suitable for new / first rime investors


• You can invest either in lump sum or through SIP

Investors should consult with their financial advisors if HDFC Top 100 Fund is suitable for their investment needs.