Insights on HDFC Flexi Cap Fund

Solid returns in last decade

Hello Friends, Today we will discuss the HDFC Flexi Cap Fund Regular plan Growth option.

The HDFC Flexi Cap Fund is a well-regarded mutual fund scheme that provides investors with the flexibility to invest across market capitalizations that means large, mid, and small-cap stocks. Launched on January 01, 1995, this fund has been a popular choice among investors looking for diversified equity exposure. The fund is managed by Dhruv Muchhal and Roshi Jain, who have extensive experience in the investment management field and has been instrumental in steering the fund’s performance. Now lets have a look on performance overview

Please note that the information provided here is for educational purposes only and not investment advice. Please make your research and consult your financial advisor before investing.

Performance Overview

When evaluating a mutual fund, performance metrics are paramount. The HDFC Flexi Cap Fund has shown commendable growth over various time frames:

– Annualized Returns:
  – 1 Year: 43.8%
  – 3 Years: 23.4%
  – 5 Years: 22.9%
  – 10 Years: 15%

These figures highlight the fund’s ability to generate consistent returns over long-term periods, making it a suitable option for investors with medium to long term investment horizons.

Key Metrics

Understanding the fund’s risk-adjusted performance is critical. Here are some essential metrics, please note metrics keep on changing on continuous basis:

– Total Expense Ratio (TER): The latest TER for the HDFC Flexi Cap Fund is 1.43% as declared on 30 September 2024. This percentage indicates the cost incurred by the fund for managing investments, which is crucial for assessing net returns. Category average was 1.9%
 
– Standard Deviation: The standard deviation of the scheme is 13.2, which measures the fund’s volatility. A lower standard deviation suggests a more stable performance.

– Jensen’s Alpha: The fund has an alpha of 7.26, indicating its excess return compared to a benchmark index. A positive alpha signifies outperformance.

– Beta: The beta of the fund is 0.87, reflecting its sensitivity to market movements. A beta less than 1 indicates lower volatility compared to the market.

– Sharpe Ratio: The Sharpe ratio of the scheme is 1.29, which shows the return per unit of risk. A higher Sharpe ratio is preferable as it suggests better risk-adjusted returns.

– Treynor’s Ratio: The Treynor ratio is 0.2, further assessing risk-adjusted performance but specifically focusing on systematic risk.

Top 10 Portfolio Holdings

The HDFC Flexi Cap Fund maintains a diversified portfolio, investing in various sectors. The top 10 holdings as of the latest report include:

1. HDFC Bank
2. ICICI Bank
3. Axis Bank
4. HCL technologies Ltd
5. Cipla Ltd
6. Bharti Airtel Ltd
7. Kotak Mahindra Bank Ltd
8. SBI Life Insurance Co
9. Maruti Suzuki India
10. Piramal Pharma

This diversification helps mitigate risks and enhances potential returns by spreading investments across different sectors.

 Advantages of HDFC Flexi Cap Fund

Here are several compelling reasons why investors should consider the HDFC Flexi Cap Fund:

1. Flexibility in Investment: As a flexi cap fund, it can dynamically adjust its exposure to large, mid, or small cap stocks based on market conditions, providing growth opportunities in various market cycles.

2. Experienced Management: Managed by a seasoned fund manager, the fund benefits from expert insights and strategic decision-making.

3. Consistent Performance: The fund’s historical performance shows resilience and the ability to navigate different market environments effectively.

4. Diversification: A well-diversified portfolio reduces risks associated with investing in a single stock or sector.

5. Suitable for Long-term Goals: With the potential for high returns, this fund is suitable for investors looking to build wealth over the long term.

Key Risks Associated with the Scheme

While there are numerous advantages, it is crucial to understand the risks involved:

1. Market Risk: Being an equity fund, it is subject to market fluctuations. Economic downturns can adversely affect stock prices.

2. Concentration Risk: If the fund invests significantly in specific sectors or stocks, it might be vulnerable to sector-specific downturns.

3. Managerial Risk: The performance heavily relies on the fund manager’s decisions. Any change in management can impact the fund’s future performance.

4. Liquidity Risk: In adverse market conditions, the fund may face challenges in selling securities without affecting their market price.

Conclusion

In conclusion, the HDFC Flexi Cap Fund offers a compelling investment opportunity for those looking to diversify their portfolios and seek long-term capital appreciation. However, potential investors should carefully consider the associated risks and conduct thorough research before making any investment decisions.

As we’ve discussed, the fund is characterized by its flexibility to invest across various market caps, strong management, and a history of performance that can appeal to both conservative and aggressive investors. However, like any investment, it’s essential to align your investment choices with your financial goals, risk tolerance, and investment horizon.

Remember, mutual fund investments are subject to market risks, and it’s crucial to read all scheme-related documents carefully before investing.

For more insights on wealth creation, visit us at BetterKarts.org, follow us on Instagram @betterkarts.investments, or write to us on WhatsApp for a free consultation. Thank you for joining me today, and I look forward to our next discussion on empowering your financial future!