Mutual Funds

HDFC Mid-Cap Opportunities: SIP your way into this opportunity

Yoganand D | Updated on January 20, 2018 Published on May 15, 2016

mfeps

A possible revival in the economy could boost this fund’s fortunes in the long run



Mid and small-cap stocks stole the show in 2014 and 2015. But their splendid run makes them vulnerable for a steep correction. Investors with a high risk appetite and longer term horizon can invest in mid-cap funds that have performed consistently.

HDFC Mid-Cap Opportunities has outperformed its benchmark 94 per cent of the times on a rolling return basis over the last five years. Over three and five years, the fund has delivered returns of 27.7 per cent and 19.3 per cent, respectively, outperforming the benchmark returns of 17.7 per cent and 10.3 per cent over the same period. Over a one-year period, though, the fund has performed almost in line with the benchmark. It remains in the top quartile across longer time frames. Investors can invest in this fund using systematic monthly investments to average out costs across market phases.

Performance and strategy

The fund has performed well even in volatile phases. While it contained downsides during the 2011 market correction, it beat its benchmark in the sideways market of 2013. It delivered 9.6 per cent gains in 2013 while its benchmark, the Nifty Midcap 100 Index, lost 5 per cent.

Over the past two years, the fund has also remained invested in the market, taking reduced cash calls, which has helped it make the best of rallies. Its sector choices have also paid off. In 2014, it moved out of pharma and increased exposure in banks, which worked in its favour, as stocks rallied on hopes of a recovery in the economy.

It delivered an enviable 76.6 per cent returns in 2014, beating the benchmark and category by a wide margin.

While the fund did trim its exposure in most of its banking stocks in 2015, it failed to beat its benchmark, owing to its 18-19 per cent exposure to financials through the year. It is currently overweight on financials, engineering and chemicals sectors and underweight on healthcare, FMCG and energy.

A possible revival in the economy could boost the fund’s returns over the long term. Moreover, within the financials space, the fund has holdings in sound stocks, such as Bajaj Finance, Axis Bank, Cholamandalam Investment and Finance and YES Bank. The fund added the gas sector to the portfolio last November and increased the allocation recently. In this space, it has added Petronet LNG stock which has been performing well. Havells India, Redington India and IndusInd Bank are the other recent additions. HDFC Mid-Cap holds 78 stocks in its kitty and the exposure to individual stocks is less then 4 per cent of the total allocation, which mitigates the risk.

Published on May 15, 2016

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
null
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.