HDFC Balanced Fund has been merged with HDFC Premier Multi-cap Fund to form the HDFC Hybrid Equity Fund which has been effective from 1st June 2018. The investment strategy of the newly created fund is nearly similar to HDFC Balanced Fund - Growth and the investors who have invested in this fund can stay invested but the HDFC Premier Multi-Cap Fund investors need to rethink about their investment goals as the former fund was an equity multi-cap fund but the latter one is a mixture of equity and debt instruments and has completely different goals and strategies.
About HDFC Hybrid Equity Fund (G)
The fund belongs to newly introduced aggressive hybrid category which was previously known as balanced fund category. It has a mixed portfolio of equity and debt instruments, but the equity instruments are in the majority. The equity instruments are chosen to harvest returns while the debt instruments provide stability to the fund along with a stable growth due to which the risk factor is compromised. HDFC Hybrid Equity Fund has been successful in achieving the long-term goal of the investors without facing heavy downfalls in the negative market trend.
HDFC Hybrid Equity Fund has delivered expected returns in the past which are well above its benchmark and peers. It has produced an annualised return of 19.02% in last five years and 16% in the previous ten years. The benchmark VR Balanced TRI has shown 12.94 and 10.18% returns in the last 5 and ten years respectively, and the category average is also far behind at 15.46% and 11.53%. Since inception in April 2005, it has generated an annualised return of 13.03%. The rolling returns in the past have been above the benchmark most of the times. (data as of 23rd July 2018)
The fund is managed by Mr Chirag Setalvad and Mr Rakesh Vyas. Both of them are senior fund managers at HDFC Mutual Fund. Mr Vyas has been leading the HDFC Balanced Fund since May 2012. He is a B.E. in electrical and PGDM in Business Management from XLRI Jamshedpur. Previously, he was associated with Lehman Brothers and Nomura. Mr Setalvad has been recently appointed as the fund manager of HDFC Hybrid Equity Fund in June 2018. He is a B.Sc and MBA from the University of North Carolina. Before joining HDFC Mutual Fund, he has worked with Vernon Advisory Services Ltd, HDFC, and ING Barings NV.
The portfolio of the fund is spread across various types of equity and debt instruments. In general, approximately 65% of the corpus is invested in equity and its derivative instruments, and 35% is invested in debt related instruments. The equity allocated corpus is mostly invested in large-cap companies like HDFC Bank, Infosys, HDFC, ITC, ICICI Bank, etc. Banking and finance sector is top priority followed by technology, engineering, oil&gas, chemical, etc. Most of the debt instruments are government loans and securities of SOV ratings. The average maturity period of the debt instruments is 4.73 years. The aim is to gather returns through equity instruments while the debt instruments provide resistance to the volatility in the NAV.
HDFC Hybrid Equity Fund-Growth allows investment through SIP as well as lumpsum. The SIP of minimum Rs 500 and the additional investment of minimum Rs 1000 can be started in multiples of Rs 100, after an initial deposit of Rs 5000. The expense ratio is 2.05%, and the exit load is standard. The NAV of HDFC Hybrid Equity Fund is Rs 51.43 as of 23rd July 2018.
The fund is suitable for a variety of investors including the newcomers in the mutual fund industry. The fund provides stable and consistent growth at the expense of moderately lower risk. It provides abundant capital appreciation for a long-term and is advisable for the investors who are not aware of the risk they can tolerate.
Read the article for the performance, fund management staff, portfolio, and other valuable details of HDFC Hybrid Equity Fund