Mid-and small-cap funds actively churn their portfolio to generate returns higher than their benchmarks.

But HDFC Mid-Cap Opportunities has managed to figure among the top performers in the equity category in the last one year with minimum churn to its portfolio.

Its portfolio turnover ratio over the year, at 15 per cent, was lower than other funds, HDFC Equity and HDFC Top 200, from the same stable.

That is not to say that HDFC Mid-Cap Opportunities was not actively managed.

The fund has been altering its level of exposure to individual stocks and sectors without entirely replacing them with new set of stocks.

For instance, while a year ago, IPCA Laboratories was its top stock holding, it is now in the second position. Carborundum Universal has replaced it in the top spot.

Similarly, the fund targets few high-return stocks at the right time, makes the best of the rally in such stocks and then reduces exposures to them later. For instance, stocks such as Solar Industries and Vesuvius India, which paid off handsomely last year figured in the fund's top ten holdings six months ago. By March 2012, the stocks still continued in the portfolio but, outside the top ten.

Sector and stock rejig

HDFC Mid-Cap Opportunities retained its top five sector holdings over the year but re-jigged the rankings within the top five.

While industrial products remained the top sector in the fund's portfolio until December 2011, banks took over from January this year. As of March 2012, Allahabad Bank, Bank of Baroda and Indian Bank were some of the top holdings in this space.

With holdings in Lupin axed a bit, the pharma sector slipped to the third spot from second over the one-year period. But IPCA Laboratories still accounts for 3.8 per cent of the fund's holdings.

Interestingly, holdings in the consumer non-durables space reduced from 7.3 per cent a year ago to 4 per cent in March 2012. Demanding valuations of quite a few stocks in this sector may have resulted in the fund reducing exposure. The fund made an exit from stocks such as Britannia Industries and Marico. Similarly, exposure to auto ancillary stocks was also pared. But stocks such as Exide Industries and Amara Raja Batteries have stayed in the portfolio, albeit with reduced weights.

The most visible change in the sector exposure was the hike in software stocks. From holding just 0.4 per cent of its assets in software stocks a year ago, HDFC Mid-Cap Opportunities gradually increased it to 6.2 per cent in March 2012. eClerx Services, NIIT Technologies and Oracle Financial Services were some of the holdings in this space.

Stocks such as Emami and Natco Pharma, which are new additions, could well be dark horse plays.

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