5 top HDFC Mutual Fund schemes in 2018HDFC Mutual Fund (also known as HDFC Asset Management Company) was launched almost two decades ago in 1999 and has been one of the top asset management companies (AMC) in India for several years. HDFC Mutual Fund was listed on the stock exchanges in August 2018 and rallied as much as 65% on the first day of listing. It is India’s second largest AMC (after ICICI Prudential AMC) with assets under management (AUM) of about Rs 3 lakh crore.

In this article, we pick the top five funds of HDFC AMC for you. However please note that we do not advise you to pick funds from HDFC AMC alone – you should pick top funds from across different AMCs.

  1. HDFC Small Cap Fund

Even as the small-cap index has tumbled 5.5% over the past year (as of 16/09/2018), HDFC Small Cap Fund has rallied – delivering a stellar 19% return. This is fund management at its best, not just beating the index but going positive as the index goes negative. One must remember that 4,750 of India’s 5,000 odd listed companies (95% of the total) are small-cap. This gives small-cap funds immense potential and a huge playing field for delivering returns. Unlike large caps or even mid-caps, small-cap funds do not have to ‘hug’ an index as they have a larger investing universe. Rather their fund manager is free to find his own winners or losers. Chirag Setalvad and Rakesh Vyas have been at the helm of this fund since June 2014, and have picked a series of winners over time delivering the returns as shown below.

Instrument 1 year return 3 year return 5 year return 10 year return
HDFC Small Cap Fund 19% 22% 24.8% 17.63%
Nifty Small Cap 100 5.5% 14.5% 22.6% N/A

Source: Value Research, Data as on 16/09/2018   

Rs 1 lakh invested in this fund 10 years ago would now be Rs 5 lakh.

  1. HDFC Hybrid Equity Fund

Being a hybrid equity fund (earlier called ‘balanced fund’) has not been an easy task in 2018. Interest rates have surged, pulling down bond prices and hurting the debt component of such funds a great deal. Equity markets have rallied but only in select pockets. Most hybrid funds have struggled massively. HDFC Hybrid Equity fund was created by the fusion of the erstwhile HDFC Balanced Fund and HDFC Premier Multicap Fund. It is gigantic, with an AUM of about Rs 23,000 crore. Anyone looking at its one-year returns of 4.9% would be put off but they would be ignoring the highly challenging market conditions the fund is operating under. The fund’s three and five-year returns at 12.4% and 20.2% are far better than what is expected of a hybrid fund. The fund is currently managed by the same team as HDFC Small Cap, namely Chirag Setalvad and Rakesh Vyas. Out of them, Chirag Setalvad joined the fund relatively recently in June 2018. Given their prowess with managing equity funds, we expect strong performance from them in HDFC Hybrid Equity Fund.

Instrument 1 year return 3 year return 5 year return 10 year return
HDFC Hybrid Equity Fund 4.9% 12.4% 20.2% 16.1%
VR Balanced TRI 13.5% 13.4% 14.4% 10.9%

Source: Value Research, Data as on 16/09/2018

  1. HDFC Capital Builder Fund

This fund has delivered powerful returns in a quiet, almost understated way. At an AUM of about Rs 3,800 crore, it is relatively small for HDFC Funds. Miten Lathia, its fund manager since August 2010, does not give a lot of interviews. However, it seems, he would rather have the fund’s performance speak for itself. HDFC Capital Builder Value Fund is a Value Fund under SEBI rules and is required to follow a value investing strategy. This means finding relatively undiscovered stocks before their potential is fully priced in by the market. The fund gains when the market eventually wakes up to these stocks. Value Investing thus needs patience both from the fund manager and from you, the investor. A fund like HDFC Capital Builder Fund has amply rewarded the patience of its investors: A sum of Rs 1 lakh invested in it 10 years ago would now be Rs 4.44 lakh, multiplying more than fourfold in 10 years.

Instrument 1 year return 3 year return 5 year return 10 year return
HDFC Capital Builder Value Fund 12.2% 16.3% 22.1% 16.1%
Nifty 500 TRI 11.6% 15.6% 18.4% 12.5%

Source: Value Research, Data as on 16/09/2018

  1. HDFC Top 100 Fund

Launched in 1996, this fund is ingrained deep in investor memory and has built wealth for a lot of investors. In case you can’t quite place it, note that it was earlier known as HDFC Top 200. In 2018, this fund was renamed and given a more large-cap mandate after the SEBI-mandated mutual fund reclassification. It must now invest in the top 100 companies by market cap. However, given its stellar track record, we expect the fund to adapt quite well to its new investment mandate. HDFC Top 100’s returns since launch are 20.3% meaning that it has multiplied investor wealth 58 times in just over 2 decades. It has also beaten its benchmark, the Nifty 100 TRI, over the past 5 and 10 years.

Instrument 1 year return 3 year return 5 year return 10 year return
HDFC Top 100 8.4% 14.0% 18.3% 14.7%
Nifty 100 TRI 12.7% 14.8% 16.9% 13.3%

Source: Value Research, Data as on 18/09/2018

The fund is managed by Prashant Jain, perhaps the most well-known fund manager in the Indian mutual fund industry. Prashant Jain has run this fund for the last 16 years and this alone is a testament to the durability and consistency of the fund. Rakesh Vyas is the co-fund manager.

  1. HDFC Mid Cap Opportunities Fund

Classified formally as a midcap fund, HDFC Midcap Opportunities must invest 65-100% of its assets in the stocks of mid-cap companies. The rest can be invested in other types of companies or debt. Midcap companies are defined as those between 100th to the 250th largest company by market cap.

Managed by the power-packed team of Chirag Setalvad and Rakesh Vyas, HDFC Midcap Opportunities Fund is an outperformer. The fund has given us 10-year returns of 20.9% and 5-year returns of 28% beating the Nifty Midcap TRI by handsome margins. Seen from this perspective, its recent somewhat muted performance should not perturb you. The one year returns, though modest at 4% still beat the benchmark at 2.6%.  

Instrument 1 year return 3 year return 5 year return 10 year return
HDFC Midcap Opportunities Fund 4% 15.6% 28% 20.9%
Nifty Midcap 100 TRI 2.6% 16.1% 21.05% 15.4%

Source: Value Research, Data as on 18/09/2018

In parting, remember that you should select good funds, regardless of the fund house. However, some AMCs and fund managers do bring a lot of skill to the table and HDFC AMC is one of them. Within the bouquet of funds offered by this asset manager, we’ve picked the five top ones for you.

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Staff Writer

This article is written by RupeeIQ editorial staff.