Flexi Cap funds are a popular choice for investors looking for a balanced approach to equity investing. These funds have the flexibility to invest across large-cap, mid-cap, and small-cap stocks, allowing fund managers to adapt to changing market conditions. One of the standout performers in this category is the HDFC Flexi Cap Fund. In this blog, we’ll take a deep dive into the fund’s performance, portfolio, risk factors, and suitability for investors.
1. Fund Overview
What is HDFC Flexi Cap Fund?
The HDFC Flexi Cap Fund is an open-ended equity mutual fund that invests across large-cap, mid-cap, and small-cap stocks. The fund aims to generate long-term capital appreciation by dynamically allocating its portfolio based on market opportunities.
- Category: Flexi Cap Fund
- Investment Objective: To generate capital appreciation/income from a portfolio predominantly invested in equity and equity-related instruments.
- Fund Manager: Roshi Jain (since July 29, 2022)
- Total Experience: Over 18 years
- Inception Date: January 1, 1995
- Assets Under Management (AUM):
- As of February 29, 2024: ₹16,756.88 Crores
- Average for February 2024: ₹16,502.31 Crores
- Expense Ratio:
- Regular Plan: 1.69%
- Direct Plan: 0.82%
- Benchmark: NIFTY Large-Midcap 250 (Total Returns Index)
- Additional Benchmark: S&P BSE SENSEX (Total Returns Index)
2. Portfolio Composition
Top 10 Holdings
The fund’s portfolio is well-diversified across sectors, with a mix of large-cap, mid-cap, and small-cap stocks. Here are the top 10 holdings as of February 29, 2024:
| Company | Sector | % of NAV |
|---|---|---|
| ICICI Bank Ltd. | Banks | 9.32% |
| HDFC Bank Ltd. | Banks | 9.24% |
| Axis Bank Ltd. | Banks | 6.06% |
| Cipla Ltd. | Pharmaceuticals & Biotechnology | 5.66% |
| Hindustan Aeronautics Limited | Aerospace & Defense | 5.58% |
| State Bank of India | Banks | 5.09% |
| HCL Technologies Ltd. | IT – Software | 4.96% |
| SBI Life Insurance Company Ltd. | Insurance | 4.38% |
| Bharti Airtel Ltd. | Telecom – Services | 3.60% |
| Apollo Hospitals Enterprise Ltd. | Healthcare Services | 3.36% |
Sector Allocation
The fund’s equity holdings are spread across various sectors, with a significant focus on Banks, IT – Software, and Pharmaceuticals & Biotechnology.
| Sector | % of Net Assets |
|---|---|
| Banks | 30.95% |
| IT – Software | 9.02% |
| Pharmaceuticals & Biotechnology | 8.52% |
| Aerospace & Defense | 5.58% |
| Realty | 5.46% |
| Insurance | 4.39% |
| Telecom – Services | 4.17% |
| Power | 4.08% |
| Healthcare Services | 3.96% |
| Automobiles | 3.79% |
3. Performance Analysis
SIP Performance (Regular Plan – Growth Option)
Systematic Investment Plans (SIPs) are a great way to invest in mutual funds. Here’s how the HDFC Flexi Cap Fund has performed over different time periods:
| Period | Total Amount Invested (₹) | Market Value (₹) | Returns (%) |
|---|---|---|---|
| Since Inception | ₹35.00 Lacs | ₹1,738.77 Lacs | 21.28% |
| 15 Years | ₹18.00 Lacs | ₹70.81 Lacs | 16.59% |
| 10 Years | ₹12.00 Lacs | ₹30.83 Lacs | 17.96% |
| 5 Years | ₹6.00 Lacs | ₹11.59 Lacs | 25.70% |
| 3 Years | ₹3.50 Lacs | ₹5.37 Lacs | 27.79% |
| 1 Year | ₹1.20 Lacs | ₹1.48 Lacs | 45.04% |
Lump-Sum Performance
If you had invested ₹10,000 in the fund, here’s how it would have grown over time:
| Period | Scheme Return (%) | Benchmark Return (%) | Additional Benchmark Return (%) | Value of ₹10,000 Invested |
|---|---|---|---|---|
| Last 1 Year | 42.22% | 38.88% | 28.40% | ₹14,236 (Scheme) |
| Last 3 Years | 25.02% | 19.34% | 16.12% | ₹19,577 (Scheme) |
| Last 5 Years | 20.81% | 18.78% | 16.64% | ₹25,764 (Scheme) |
| Last 10 Years | 17.99% | 16.56% | 14.72% | ₹52,378 (Scheme) |
| Since Inception | 18.96% | 12.55% | 11.79% | ₹1,586,783 (Scheme) |
4. Risk Analysis
Key Risk Metrics
- Standard Deviation: 12.939% (Indicates moderate volatility)
- Beta: 0.924 (Indicates the fund is slightly less volatile than the market)
- Sharpe Ratio: 0.957 (Indicates decent risk-adjusted returns)
What Do These Metrics Mean?
- Standard Deviation: The fund’s returns can fluctuate moderately, which is typical for a diversified equity fund.
- Beta: The fund is slightly less volatile than the market, meaning it may not move as sharply as the broader market.
- Sharpe Ratio: The fund has delivered decent returns relative to the risk taken.
5. Exit Load
- Exit Load:
- 1.00% if units are redeemed/switched out within 1 year from the date of allotment.
- No Exit Load if units are redeemed/switched out after 1 year from the date of allotment.
6. Who Should Invest?
Suitability
- Investor Profile: Suitable for investors with a moderate to high-risk appetite and a long-term investment horizon (5-7 years or more).
- Investment Horizon: Long-term (5 years or more)
- Risk Appetite: Moderate to High
Why Invest in HDFC Flexi Cap Fund?
- Flexibility: The fund can invest across large-cap, mid-cap, and small-cap stocks, allowing it to adapt to market conditions.
- Experienced Fund Manager: Roshi Jain has over 18 years of experience and a proven track record.
- Diversified Portfolio: The fund invests across various sectors, reducing concentration risk.
7. Risks to Consider
- Market Risk: Equity funds are subject to market fluctuations, and the fund’s NAV can go up or down based on market conditions.
- Sector Concentration: The fund has a significant allocation to the banking sector, which could be a risk if the sector underperforms.
- Volatility: While the fund is less volatile than small-cap funds, it is still subject to moderate volatility.
8. Conclusion
The HDFC Flexi Cap Fund is a strong option for investors looking for a balanced approach to equity investing. With the flexibility to invest across market caps, a seasoned fund manager, and a solid track record, the fund has delivered consistent returns over the long term. However, investors should be aware of the risks associated with equity investments and should only invest if they have a long-term horizon and a moderate to high-risk tolerance.
Key Takeaways
- Strengths: Flexibility to invest across market caps, experienced management, and a diversified portfolio.
- Risks: Market risk, sector concentration, and moderate volatility.
- Recommendation: Ideal for long-term investors with a moderate to high-risk appetite.
Source of Data
All data and performance metrics are sourced from the HDFC Mutual Fund Factsheet for February 2024. The fact sheet provides detailed information on the fund’s portfolio, performance, and risk metrics.
Investing in flexi-cap funds like the HDFC Flexi Cap Fund can be a rewarding journey, but it’s essential to stay informed and understand the risks involved. If you’re ready to take on the challenge, this fund could be a valuable addition to your portfolio.
Disclaimer: Mutual fund investments are subject to market risks. Please read the scheme-related documents carefully before investing. Past performance is not indicative of future returns.
