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How HDFC Mutual Funds works in providing best returns

HDFC Mutual Funds is a leading and top asset management company in India, with an average asset under management standing at 3.35 lakh crore INR by the end of the fourth quarter as of December 2018.

HDFC Mutual Funds offers a wide array of products across 11 different types of funds categories varying from regular equity to debt to hybrid and liquid funds. Since the launch of its first product in 2000, it has been the preferred investor destination to start their mutual fund investment with. Its funds have managed to outperform both its benchmark and its peers by a wide margin, thus providing higher return ratio to its investors.

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All the major and well performing mutual fund schemes of HDFC are top-rated by external rating agencies. Some of the top-performing mutual fund schemes of HDFC MF are listed as follows:

Funds 5-yr Return (%)
HDFC Equity Fund 16.64
HDFC Mid-Cap Opportunity Fund 20.81
HDFC Top 100 Fund 15.75
HDFC Capital Builder Value Fund 17.29
HDFC Small Cap Fund 20.42

 

With most of the mutual fund schemes under it being stable and generating higher returns compared to its peers or the benchmark index, so how does HDFC MF manage to provide the best returns to its customers?

How it Works?

One of the most common practices among all the fund managers in HDFC MF is to pick companies which have a robust business model, clean balance sheet and competitive strengths. This strict policy adherence allows fund managers to weather volatile phases in the market and generate higher returns over a long period of time.

HDFC MF’s star Fund Manager and CIO, Prashant Jain manages some of the top performing funds including the HDFC Equity Fund, HDFC Top 100 Fund, HDFC Balanced Advantage, and the HDFC Top 200 Fund. He follows a research-oriented investment approach and picks stocks on a bottom-up basis, factoring in the macro-economic environment.

Stocks are picked using both relative and absolute valuation methods, with a strong bias towards the large-cap stocks having strong fundamentals. All the funds that he manages display a consistent portfolio over longer periods of time. This helps in lowering the fund’s turnover ratio, thus significantly lowering the fund’s expense ratio and in turn generating higher returns.

And, he also keeps the cash/current asset in all his funds less than 1 per cent, against the prescribed norm of 4 per cent, thus staying fully invested all the time.

HDFC MF’s other fund managers investment strategy revolves around the much successful investment strategy deployed by Prashant Jain, i.e., to pick companies with strong fundamentals at attractive valuations.

Chirag Setalvad, a senior Fund Manager at HDFC MF who manages the HDFC Mid-Cap opportunities only picks businesses with a strong track record that generates reasonable free cash flow and have a high return on equity. Further, he picks stocks which are not too expensive as compared to their growth prospect.

Looking Ahead

Since its inception, the HDFC Mutual Fund has managed to keep the returns ratio of its funds higher and has consistently outperformed its benchmark and peers. Its well-proven investment philosophy has helped it to keep the expense ratio of funds at the lower side, thus increasing the returns. Further, investing in strong businesses helped it to better manage the risks during market volatility and generate higher returns over a longer duration. You can choose HDFC mutual funds by OroWealth to get good returns for your investments.

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