Incorporated on December 10, 1999, HDFC Asset Management Company Ltd. is among India’s most popular fund houses.
HDFC Mutual Fund launched its first scheme in July 2000, and ever since it has been ambitious about offering a stable performance of funds across all the variants of schemes it offers.
The HDFC Mutual Fund is managed by HDFC Asset Management Company (HDFC AMC) Limited. HDFC Trustee Company Limited is the trustee of the mutual fund. The HDFC Mutual Fund is sponsored by the Housing Development Finance Corporation Limited (HDFC Ltd.) and Standard Life Investments Limited.
HDFC Capital Builder Value Fund
Investment objective
The scheme aims to achieve capital appreciation/income in the long term by primarily investing in undervalued stocks.
Investment process
- Undervalued stocks are generally those that are trading at prices below their intrinsic value as measured by potential earnings or asset values and/or future cash flow growth.
- The scheme endeavors to maintain a minimum of 60 % of the portfolio in companies that are trading at multiples lower than the Median P/E (Price/Earnings) or Median P/B (Price/Book Value) of the NIFTY 500 Index or below the five-year historical average of own trailing P/E or P/B.
Portfolio composition
The portfolio holds significant exposure in equity & equity-related instruments at 99.19%, and significant sectoral exposure is to Banks, which account for roughly 29.37% of the portfolio. The top 5 sectors hold more than half of the portfolio.
Source: HDFC MF
Top 5 Holdings for HDFC Capital Builder Value Fund
| Name | Weightage % |
| ICICI Bank Ltd. | 9.70 |
| HDFC Bank Ltd. | 9.07 |
| Infosys Ltd. | 6.82 |
| Axis Bank Ltd. | 5.11 |
| Bharti Airtel Ltd. | 4.66 |
Source: HDFC MF
Performance
| This Fund | Nifty 500 TRI | Nifty 50 TRI | |
| CAGR | CAGR | CAGR | |
| 1 Year | 14.46% | 12.74% | 12.94% |
| 3 Years | 28.03% | 27.61% | 26.02% |
| 5 Years | 9.58% | 12.35% | 12.89% |
| 10 Years | 14.92% | 14.19% | 13.33% |
| Since Inception | 13.97% | NA | 10.90% |
Source: HDFC MF
Fund Manager
- Mr. Gopal Agarwal (Since December 10, 2021) has over 19 years of experience in Fund Management and 2.5 years in Equity Research. Before HDFC AMC, he worked at DSP Investment Managers Private Limited, TATA Asset Management Company Limited, and Mirae Asset Global Investments (India) Pvt. Ltd.
Who Should Invest in HDFC Capital Builder Fund?
This scheme is suitable for investors who
- Intend to invest in undervalued companies.
- Would like to invest in a diversified portfolio with a long-term horizon.
- Want twin benefit of earnings growth as well as re-rating of valuation multiples.
- Are looking for a sound and disciplined approach to investing in volatile times.
Why Invest in this Fund?
- The fund follows a diversified multi-cap strategy with a value bias.
- There is an emphasis on investing in undervalued stocks with a reasonable margin of safety.
- Investors with long-term horizons can benefit not only from earnings growth but also from the re-rating of multiples.
- The fund is an actively managed diversified equity portfolio that invests across sectors without a market cap bias.
Time Horizon
- One should look at investing for at least 3-4 years or even more.
- The fund is open-ended. One can invest any time in this fund.
Conclusion
The HDFC Capital Builder Fund has outperformed both benchmarks consistently except for a five-year period. With an Asset Under Management of ₹5,534.27 Cr as on May 31, 2023, it is one of the largest funds in the value category.
Therefore, the fund is suitable for investors looking for long-term wealth creation with an understanding of high risk. However, investors must remain invested for a long-time horizon to witness wealth creation.
Disclaimer
This is not recommendation advice. All information in this blog is for educational purposes only.
