A Look Back: Prashant Jain's Secret Sauce

WHY WE DID THE STORY: It was sometime in July 2010. The world was coming out of a financial crisis and in general things were getting better. Mutual funds were suddenly looking optimistic and money had started to flow in the system. At that time, Prashant Jain’s HDFC Top 200 Mutual Fund crossed the Rs. 8,000 crore mark in terms of assets to become the biggest equity scheme in India. Two flagship schemes — HDFC Equity and HDFC Top 200 — had also given an annual return of 28 percent over the past decade, beating the benchmark BSE 200 which had returned only 16 percent during the same period. We had a man who was managing the biggest scheme in India and also delivering the highest returns. But as the fund size becomes big, it creates a lot of problems for fund managers. These funds typically need a different type of management skill set and not every manager is up to the task. Our question was: Will Jain deliver the same kind of returns as his schemes grow in size? After talking to many experts, we started to believe that he would. Jain himself thought that we were making a big deal because his scheme was not even 1 percent of the size of the market capitalisation in India.

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WHERE THE STORY STANDS: Jain was right. Today the size of the scheme has moved up from Rs. 8,000 crore in August 2010 to Rs. 10,000 crore in March 2011 and has still maintained its winning streak. Over the last one year, the BSE 200 is up by 8 percent and the Top 200 portfolio is up by 17 percent. Over the past decade, the fund is up by 32 percent. Jain has managed to maintain this by careful stock picking and, above all, maintaining his cool in any kind of market volatility and a firm belief in sticking to what he really knows. We believe that he has at least five more years to maintain his growth path. In any case, Jain is one of the fund managers who will end up in the international hall of fame for fund managers for his ability to manage big funds and deliver consistent returns.