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 Dividend Yield Fund
Investment Objective
The scheme aims to provide capital appreciation and/or dividend distribution by predominantly investing in a well-diversified portfolio of equity and equity-related instruments of dividend-yielding companies.
Investment Strategy
- The fund aims to invest a minimum of 65% of the scheme’s assets in dividend-yielding companies at the time of investment or companies that choose to do a buyback in addition to payment of dividends or in lieu of dividends.
- While trailing dividend yield will be an important factor in selecting a stock, the fund manager will also consider business fundamentals, industry outlook, absolute and relative valuations, growth outlook, and corporate governance.
- The fund aims to be sector and market-cap agnostic.
Portfolio Composition
The portfolio holds significant exposure in equity & equity-related instruments at 97.83%, and significant sectoral exposure is to IT-Software, which accounts for roughly 13.01% of the portfolio.
Over 68% of the equity was held in large cap, whereas approximately 21% and 11% were held in mid-cap and small-cap stocks as of May 31, 2023.
Source: HDFC MF
Top 5 Holdings for HDFC Dividend Yield Fund
| Name | Weightage % |
| ITC Ltd. | 4.66 |
| ICICI Bank Ltd. | 4.10 |
| Infosys Ltd. | 4.07 |
| Hindustan Unilever Ltd. | 3.95 |
| Tata Consultancy Services Ltd. | 3.80 |
Source: HDFC MF
Performance
| This Fund | Nifty 500 TRI | Nifty 50 TRI | |
| CAGR | CAGR | CAGR | |
| 1 Year | 17.16% | 12.74% | 12.94% |
| Since Inception | 21.53% | 15.55% | 14.26% |
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 Dividend Yield Fund?
This scheme is suitable for investors who
- Are looking for a diversified portfolio of dividend-yielding stocks with an objective to provide capital appreciation over the long term
- Aim for investment in equities with a fair amount of stability and relatively lower risk (than other equity funds) over medium to long term
- Aim to take advantage of tax arbitrage via the mutual fund route compared to direct investing in dividend-yielding stocks
Why invest in this Fund?
- HDFC Dividend Yield Fund is one of the largest funds in the dividend yield category.
- The fund is less volatile, as depicted by the lower standard deviation compared to its benchmark.
- 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 an open-ended fund. One can invest any time in this fund.
Conclusion
The HDFC Dividend Yield Fund has outperformed the benchmarks and its peers since its inception. However, it is crucial to see how the fund performs over the long term since it was launched just a couple of years ago.
Therefore, the fund is suitable for investors looking for long-term wealth creation with an understanding of high risk. However, investors need to remain invested for a long-term time horizon to witness wealth creation.
Disclaimer
This is not recommendation advice. All information in this blog is for educational purposes only.
