HDFC Flexi Cap funds are mutual funds offered by HDFC Mutual Fund. They are a type of equity fund that is characterized by their flexibility in allocating investments across different market capitalizations including large-cap, mid-cap, and small-cap stocks. The primary objective of the fund is to generate capital appreciation or income from a portfolio invested in equity and equity-related instruments.
The HDFC Flexi Cap Fund portfolio typically consists of a diversified mix of equity and equity-related instruments across various sectors. The fund's asset allocation strategy allows it to adjust its portfolio composition based on market conditions. This strategy allows investors to invest in different stocks with different market capitalizations.
Understanding HDFC Flexi Cap Fund
HDFC Flexi Cap Fund is an open-ended equity scheme that invests across large-cap, mid-cap, and small-cap stocks. It was launched on December 8, 1994, and is managed by HDFC Asset Management Company Limited. Mr. Prashant Jain manages the fund.
This has been consistently recognized for its performance. It was awarded the 'Best Flexi Cap Fund' by Business Standard for three consecutive years from 2018 to 2020. Morningstar also awarded it the 'Flexi Cap Fund of the Year' in 2020.
The investment philosophy of HDFC Flexi Fund focuses on investing in high-quality large-cap, mid-cap, and small-cap companies. The fund manager looks for companies with strong competitive advantages and growth potential through fundamental analysis. The fund has a long-term investment perspective and focuses on investing in businesses that are available at reasonable valuations. It aims to deliver superior risk-adjusted returns by allocating assets across market caps based on opportunities.
Key Features of HDFC Flexi Cap Fund
Here are the key features of the fund:
Flexibility in Asset Allocation
HDFC fund allows one to invest across different market capitalizations including large-cap, mid-cap, and small-cap stocks.
Diversified Portfolio
HDFC Flexi fund typically maintains a diversified portfolio across various sectors. It aims to spread risk and provide investors exposure to a broad range of stocks.
Dynamic Investment Strategy
The fund follows an asset allocation strategy which allows the fund manager to adjust the portfolio composition based on changing market conditions and economic outlook.
Risk Management
The fund also incorporates risk management practices such as research & analysis, portfolio monitoring, and diversification to tackle market volatility.
Long-Term Capital Appreciation
This Flexi Cap fund allows to generate long-term capital appreciation for investors by investing in equities and equity-related instruments.
Liquidity
The fund provides liquidity to investors. It allows them to buy or sell units on any business day.
Growth Plans
This fund offers direct and regular growth plans. The HDFC Flexi Cap fund Direct Growth plan option has an expense ratio of 0.83%. Whereas, the regular growth plan starts at ₹280.56. Despite this, the fund has delivered impressive returns of 38.47% over the last year and has shown an average annual return of 17.08% since its inception. As of February 16, 2024, the HDFC Flexi Cap Fund NAV stands at ₹1,717.33.
Performance Analysis
Since its inception, HDFC Flexi Cap Fund has delivered an average annual return of 18.82%. The fund's performance has been consistent across different time frames with 1-year, 3-year, 5-year, and 10-year returns of 18.34%, 28.03%, 16.91%, and 16.81%, respectively.
It also faced challenging periods in 2015-16 and between 2019 and 2020. This was due to higher exposure to certain high-conviction bets on Infotech, Engineering, and PSU stocks that were out of favor during those periods. However, the fund has since recovered and has been among the top quartile performers in its category across different time frames.
Latest Asset & Portfolio Allocation
As of October 2023, The HDFC Flexi Cap Fund has a majority allocation to equities at 88.7%. Debt securities make up 0% of the portfolio while other assets account for the remaining 11.3%. The top five stock holdings in the fund are HDFC Bank Ltd. (9.22%), ICICI Bank Ltd. (9.18%), National Thermal Power Corp. Ltd. (5.39%), HCL Technologies Ltd. (5.04%).
According to market capitalization, the fund has:
- 80.76% allocation to large-cap stocks
- 5.28% to mid-cap stocks
- 2.66% to small-cap stocks
The portfolio is well diversified across various sectors with major allocations to:
- Financial sector (31.31%)
- Healthcare sector (11.45%)
- Energy sector (11.17%)
- Technology sector (10.73%)
This allocation gives investors an overview of how the HDFC Flexi-Cap Fund has positioned its portfolio across different asset classes, stocks, market caps, and sectors.
HDFC Flexi-Cap Fund vs Other Flex Cap Funds
Here is a comparison of HDFC Flexi-Cap Fund with other prominent flexi cap funds.
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Quant Flexi Cap Fund:
Quant Flexi Cap Fund delivered the highest returns among flexi cap funds over the last year. The fund has outperformed HDFC Flexi-Cap Fund's return of 17.68% and the category average of 17.30% for the period with an annual return of 23.43%. Therefore, Quant Flexi Cap Fund emerges as the top performer among others in the flexi cap fund category.
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Parag Parikh Flexi Cap Fund:
Parag Parikh Flexi Cap Fund delivered an annual return of 19.93% over the last year. This return positions the fund higher than HDFC Fund's return of 17.68%. Therefore, the Parag Parikh Flexi Cap Fund has put up a competitively strong performance by generating returns above HDFC Flexi Cap Fund as per its one-year figures.
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JM Flexicap Fund:
JM Flexicap Fund delivered an annual return of 19.79% in the last year. This return is higher than that of HDFC Fund's return of 17.68%. This indicates that JM Flexicap Fund has generated robust returns over the last year compared to HDFC Flexi Fund.
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Aditya Birla SF Flexi Cap fund:
Aditya Birla Sun Life Flexi Cap Fund delivered an annual return of 17.88% last year. This return is only marginally higher than HDFC Flexi Fund's return of 17.68% for the same period. It still places the fund slightly above the HDFC Flexi-Cap Fund in terms of performance.
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Franklin India Flexi Cap Fund:
Franklin India Flexi Cap fund delivered an annual return of 17.83% last year. This return is comparable to HDFC Flexi Fund's return of 17.68% for the same period. Therefore, Franklin India Flexi Cap Fund's one-year figure highlights its strong and steady performance in comparison with HDFC Flexi-Cap Fund.
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SBI Flexicap Fund:
SBI Flexi Cap Fund delivered an annual return of 17.72% last year. This return is lower than the fund's return of 17.68% for the same period. Therefore, SBI Flexicap Fund has delivered competitive returns as compared to HDFC Fund over the last year.
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Nifty 500:
HDFC Flexi Fund has outperformed its benchmark, the Nifty 500, across different time frames. The fund's performance has been better than its category average. It has generated significant excess returns as compared to Nifty 500.
Final Words
HDFC Flexi Cap Fund stands out for its flexible approach to allocating investments, resulting in consistent performance and industry recognition. The fund has tackled challenges and achieved exceptional returns under the leadership of Mr. Prashant Jain. The latest asset allocation highlights a majority focus on equities and a well-diversified portfolio. While facing tough periods, HDFC Fund remains a solid choice among other funds.