HDFC Mid Cap Opportunities Fund Review – Rating & Review - Invest

HDFC Mid Cap Opportunities Fund – Rating & Review – Invest

Roboadviso     Mutual Funds,Mutual Funds Rating     Posted On, Sat 10th September, 2016     No comments
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HDFC Mid Cap opportunities Fund

HDFC Mid Cap Opportunities Fund is an equity mid-cap fund, launched on June 25, 2007. Initially, it was a 3-year close ended equity scheme which has been converted into an open-ended one since June 25, 2010. Let us know more about the fund, whether you should buy, retain it or sell.

Basic information and costs
The minimum lump-sum investment needed for HDFC Mid Cap Opportunities Fund is Rs.5000, while the minimum SIP is Rs. 500. The expense ratio for the fund as on July 31, 2016 is 2.14 percent. There is an exit load of 1 percent if you redeem the fund before 365 days.

The benchmark for HDFC Mid-Cap Opportunities fund is Nifty Free Float Midcap 100. The AUM (Assets Under Management) size for the fund (as on July 31, 2016) is Rs. 12,559 crore. The fund has a turnover of 255 percent. From the risk perspective, the fund is termed ‘moderately high’.

HDFC Mid-Cap Opportunities Fund is helmed by fund managers Chirag Setalvad (since May 2007) and Rakesh Vyas (since May 2012).

Fund Allocation
On the basis of sector-wise allocation, HDFC Mid-Cap Opportunities Fund invests 22.07 percent in finance, 11.52 percent in engineering, 8.61 percent in healthcare, 8.18 percent in services and 7.85 percent in chemicals.

As on July 31, 2016, the top 10 holdings for the fund are HDFC Liquid Fund (3.67 percent), Hindustan Petroleum Corp. Ltd (3.40 percent), Voltas Ltd. (2.70 percent), Cholamandalam Investment & Finance Co. Ltd (2.63 percent), Tube Investments of India (2.44 percent), Aurobindo Pharma Ltd (2.31 percent), Yes Bank Ltd (2.28 percent), Bajaj Finance Ltd (2,16 percent), Axis Bank (2.14 percent) and Carborundum Universal Ltd (2.08 percent).

Performance
Since inception, the fund has given 17.65 percent returns. In the past 5 years, the fund has given 24.27 percent return per annum as against the benchmark of 16.51 percent and category average of 21.33 percent. The 3-year return of the fund has been a remarkable 40.79 percent per annum as against the benchmark return of 31.26 percent and category average of 35.71 percent. Over the past one year, the fund has given 20. 61 percent per annum as against the benchmark return of 18.63 percent and category average of 14.94 percent.

Analysis
In a mid cap segment, the fund manager plays a make or break role. Picking the right stocks and allocating them in the right concentration gives the fund a winning edge. Chirag Setalvad who has been associated with HDFC Mid-Cap Opportunities Fund since its inception, is hailed as one of the best fund managers in the mid cap segment.

Setalvad’s fund picking approach is based on in-depth study of a stock and a business model, before investing in it. He has been known to choose companies with proven track records at all times. He looks for stocks that aren’t too costly compared to their future earning potential; this he does by making use of absolute and relative valuation parameters. Absolute value is the valuation method that makes use of models to find out the company’s inherent net worth based on its projected cash flows. Relative valuation is a valuation method that finds out the value of a company with regards to its competitors.

According to the fund manager, the expanding AUM size for HDFC Mid-Cap Opportunities Fund is not really a constraint, as he has always focused on choosing stocks of companies that reflect solid business models, robust management team and sound profit making potential. The fund manager’s meticulous stock-picking ability has held the fund in good stead.

Should I buy, sell or hold?
Based on the track record and the fund manager’s expertise and experience, we would recommend you to buy HDFC Mid-Cap Opportunities Fund. If you are already an investor, you can continue investing in it.

Pros

Excellent Fund Manager
Good Fund House
Excellent Performance
Excellent Consistency

Cons

Huge Fund Size

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