HDFC Equity Fund – A Multi cap fund with history of 25 years
It is extremely difficult for an average investor to understand the valuations of large -, mid- and small-cap stocks and predict which market segment will outperform the other in the future. Based on our analysis over the past 15 calendar years, we have observed that large cap index has outperformed mid and small cap index in 4 years, mid cap index has outperformed large and small cap index in 4 years and small cap index has outperformed large and mid-cap index in 7 years. Hence, it would be wise for an investor to remain invested and have exposure in each of the market segments.
Multi cap funds tend to do the same by taking exposure across market cap i.e. large, mid and small cap stocks based on fund manager’s outlook and valuations. One of the oldest fund in the multi cap category is HDFC Equity Fund which was launched 25 years ago on 1st January 1995. From an initial corpus (AUM) of ~ Rs 52 crores in Jan’ 95, the Fund has grown from strength to strength and has an AUM of ~ Rs 23,737 crores as on December 31, 2019.
HDFC Equity Fund has stood the test of time across market cycles over the last 25 years by being invested/overweight on sectors/stocks that were the leaders in each of the past 3 market cycles. For example, the fund was an early investor in IT in 1995, which led to significant outperformance between 1995-2000. Similarly, between 2000-08 and 2008-18, the fund was overweight on old economy stocks and Auto/FMCG respectively. By predicting the leading sectors and investing way ahead of the market, the fund has been able to generate significant alpha over the long term.
The Fund has preference for strong and growing companies and has always been diversified across key sectors and variables across the economy to reduce the risk. Funds low portfolio turnover (21%(Last 1 year) as on 31st Dec’19) is also an indication of low churn and long term approach to investing. Further, the fund has an unbroken dividend track record for last 17 years.
As on 31st December 2019, the fund is overweight on Corporate Banks, Industrials, Energy, Utilities and IT. The Fund, being a multi cap fund has predominant exposure to large caps stocks and dynamic yet controlled exposure to mid/small caps.
Investors can consider Systematic Investment Plan (SIP) in the fund as their preferred mode to start investing and meet their financial goals. SIPs help to eliminate the role of emotions from investing and ensure rupee cost averaging by buying more units at lower price and vice versa. Continuing SIP over the long period, along with inculcating the habit of disciplined investing also helps you to create wealth over the long term.
With stable macroeconomic indicators and strong earnings growth outlook, we believe that the Fund is well positioned to capture the economic growth over the medium to long term.
Past Performance may or may not be sustained in the future. HDFC Mutual Fund/AMC is not guaranteeing any returns on investments made in this Fund. The current investment strategies are subject to change depending on market conditions. Stocks/Sectors referred above are illustrative and not recommended by HDFC Mutual Fund / AMC. The Fund may or may not have any present or future positions in these sectors. In view of the individual circumstances and risk profile, each investor is advised to consult his / her professional advisor before making a decision to invest in the Scheme.
For complete dividend history and record date details, visit www.hdfcfund.com
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.