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. Let us talk about the consumer product – HDFC Flexi Cap Fund
HDFC Flexi Cap Fund
Investment Objective
The primary objective is to generate capital appreciation/income from a portfolio, predominantly invested in equity & equity-related instruments.
Investment Process
The fund follows the following approach to investing.
- Focus on fundamentally strong companies with growth drivers in the medium to long term.
- Focus on competitive position, corporate governance, and industry outlook.
- Emphasis on valuation to assess risk-reward and provide a reasonable margin of safety.
- A holistic approach to valuations without relying solely on traditional parameters like P/E or P/B.
Portfolio Composition
The fund had invested 90.85% of its assets in equity & equity-related stocks, 3.21% in real estate, and 5.94% in cash and cash equivalents.
The significant sectoral exposure is to Banks, which account for roughly one-fourth of the portfolio.
Source: HDFC MF
Top 5 Holdings
| Name | Weightage % |
| ICICI Bank Ltd. | 9.13 |
| HDFC Bank Ltd. | 5.62 |
| State Bank of India Ltd. | 5.28 |
| Bharti Airtel Ltd. | 4.71 |
| Hindustan Aeronautics Ltd. | 4.63 |
Source: HDFC MF
Performance
| This Fund | S&P BSE 500 TRI | Equity: Flexi Cap | |
| 1 Year | 27.01% | 18.66% | 19.43% |
| 3 Years | 32.43% | 24.46% | 23.48% |
| 5 Years | 16.91% | 13.71% | 13.63% |
| 10 Years | 17.92% | 15.33% | 16.50% |
Source: Value Research
Fund Manager
- Ms. Roshi Jain (Since July 29, 2022) has over 17 years of experience in research and fund management. Before joining HDFC Asset Management Co Ltd in December 2021, she worked with Franklin Templeton India AMC Ltd. as a Vice President & Portfolio Manager. Ms Jain earned her Post Graduate Diploma in Management from the Indian Institute of Management, Ahmedabad, in 2002. She earned her Chartered Accountancy from the Institute of Chartered Accountants of India in 1998 with an All-India Rank 2. She is also a Chartered Financial Analyst (CFA) charter holder.
Who Should Invest in HDFC Flexi Cap Fund?
The fund is suitable for investors willing to invest across market cap. However, investors need to understand the aggressive risk exposure of this fund.
Why Invest in this Fund?
- The fund provides an opportunity to invest in companies of various market caps.
- Aims to provide diversification to an investor’s overall equity mutual fund portfolio.
- Experienced fund management and research teams with a track record of managing equity assets across market cycles.
- Emphasis on risk management – portfolio diversification across stocks and sectors; focus on good quality businesses.
- One of the largest funds in the flexi-cap category.
Ideal Time Horizon
- One should look at investing for at least three years or even more.
- Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.
Benefits of Investing in HDFC Flexi Cap Fund
- Equity Exposure: As an equity mutual fund, HDFC Flexi Cap Fund invests primarily in stocks. Historically, equities have outperformed traditional savings options like fixed deposits and savings accounts over the long term.
- Active Management: The fund’s experienced fund managers actively seek out investment opportunities across various market segments, aiming to capitalize on market trends and outperform benchmarks.
- Flexibility: The ‘flexi-cap’ nature of the fund allows the fund manager to dynamically allocate investments across large-cap, mid-cap, and small-cap stocks. This flexibility enables the fund to adapt to changing market conditions and potentially generate higher returns.
- Managed Risk: By investing in stocks across various market capitalizations, the fund diversifies its portfolio and reduces the impact of a downturn in any particular sector or market segment.
- Balanced Growth: Exposure to different market segments can help balance the portfolio’s risk-return profile. While large-cap stocks may offer stability, mid-cap and small-cap stocks can provide higher growth potential.
- Expertise: The fund’s experienced fund managers bring in-depth knowledge and expertise to analyze market trends, identify investment opportunities, and make informed investment decisions.
- Dedicated Team: A dedicated team of analysts supports the fund manager in conducting thorough research and monitoring the performance of the fund’s investments.
- Active Management: The fund’s active management approach enables the fund manager to take timely decisions to capitalize on market opportunities and mitigate risks.
Important Note: While HDFC Flexi Cap Fund has the potential for higher returns, it’s important to remember that investing in equity mutual funds involves market risk.
How to Invest in HDFC Flexi Cap Fund
To invest in HDFC Flexi Cap Fund, all you need to do is download the EduFund app from the Google Play Store or Apple App Store. Click here!
Step 1: Create an account by signing up with your basic details like name, email address, and mobile number.
Step 2: Complete the KYC process. This involves uploading documents like PAN card, Aadhaar card, and address proof.
Step 3: Link your bank account to the app to facilitate seamless transactions.
Step 4: Select the mutual fund scheme you want to invest in. Consider factors like risk tolerance, investment horizon, and financial goals.
Step 5: Select investment mode you prefer. You can choose between:
- SIP (Systematic Investment Plan): Invest a fixed amount regularly, typically monthly. This strategy helps in rupee-cost averaging, reducing the impact of market volatility.
- Lumpsum: Invest a larger amount at once. This is suitable for those who have a significant amount to invest and believe in the long-term potential of the chosen fund.
Step 6: Review the investment details and confirm the transaction.
Importance of Understanding the KYC Process and Documentation
KYC is a mandatory requirement to ensure investor protection and prevent fraudulent activities. It helps financial institutions verify the identity of their clients. Here are all the documents you need to complete the process:
- PAN Card
- Aadhaar Card
Address proof such as recent utility bills, bank statements, or passport.
Risks Involved
Market Volatility: The stock market is subject to fluctuations influenced by various factors like economic indicators, geopolitical events, and investor sentiment. This volatility can lead to short-term price fluctuations.
Economic Factors: Economic conditions, such as interest rate changes, inflation, and GDP growth, can significantly impact the performance of the fund. Adverse economic conditions can lead to a decline in various stock prices, affecting the fund’s returns.
Portfolio Rebalancing: Flexi-cap funds have the flexibility to adjust their portfolio allocations across large-cap, mid-cap, and small-cap stocks. However, frequent rebalancing can incur transaction costs and may not always be perfectly timed to capitalize on market movements.
Sectoral Risks: The fund may invest in specific sectors that are more vulnerable to economic downturns or industry-specific challenges. This could lead to underperformance if these sectors face adverse conditions.
Concentration Risk: If the fund concentrates its investments in a few stocks or sectors, it becomes more susceptible to the performance of those specific holdings. A negative event affecting these holdings could significantly impact the fund’s returns.
Conclusion
The HDFC Flexi Cap Fund has a proven track record of over 25 years, with an Asset Under Management of ₹36,345.36 Cr as on June 30, 2023.
The fund has consistently outperformed both the benchmarks and the category average also. Therefore, investors looking to generate wealth over the long term can consider this fund with an understanding of high risk.
