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HDFC Multi Cap Fund: One-Stop-Solution To Diversify Across Market Cap Segments

November 26, 2021 / 10:22 AM IST

HDFC Multi Cap Fund serves as a one-stop-solution for investors looking to diversify their portfolios across different market cap segments. It is an open-ended equity scheme with category diversification – minimum 25% each across large cap, mid cap, and small cap funds and the balance of upto 25% as a flexible portfolio, invested across the market cap and / or debt and money market instruments. The Fund allows investment across a wide range of companies, diversifies and mitigates portfolio risk and volatility, respectively.

Why HDFC Multi Cap Fund

HDFC Mutual Fund has a good track record in managing Equity Funds for the past two decades. The Multi Cap offering facilitates controlled exposure to all market cap categories across industries, like consumer finance, construction and engineering, food retail, automobiles, health care services and software. NIFTY500 Multicap 50:25:25 Index is relatively more balanced with mid and small caps accounting for 50% weightage of the total portfolio and better performance over the long term.

The multi cap funds also consider the different performance levels of segments at different points in time. One market segment may outperform the others at a given moment in time. HDFC Multi Cap fund with its controlled exposure would help to reduce this volatility across segments.

The outlook of the Indian economy is bright and forward-looking. Employment has now reached pre-COVID levels with active hiring in organized segments. Digitalization is also moving the economy in the right direction. The external sector is looking bright, with high forex reserves contributing towards INR stability against USD. The government’s focus on boosting infrastructure with monetization schemes has helped too.

Favourable environment for unleashing Multi Cap Fund

There is no opportune time than today to unleash the HDFC Multi Cap Fund. Today the global markets view India as a favourable destination for investments. This positive outlook is aided by the government's regulatory policies, ease of doing business and the huge domestic market in place. Ample liquidity with low-interest rates, controlled fiscal deficit, positive Balance of Payments and huge forex reserves all work in India's favour with targeted steps taken to attract global manufacturing and enable the right environment for private capex. Such growth drivers, coupled with a supportive environment, bodes well for India's growth story.

The downgrade cycle witnessed by corporates from FY14 till FY21, when the earnings were lower compared to estimates, have now been overturned, thanks to the post-COVID 19 business push. The markets are entering a robust profit lifecycle, with the forecast for growth looking highly bullish in the medium to long term – a 73%* jump is expected in profitability in FY24 vis-à-vis FY21. There are several reasons behind the quantum jump in profits - increased profitability of banks due to NPAs resolution, accelerated shift in market share from unorganized to organized sector, global digitization wave and the resultant e-commerce boom, rise in inflation due to supply chain disruptions and recovery in consumer demand post-Covid. This robust growth outlook along with a favourable environment makes investment in equities a win-win choice for seasoned investors.

Proposed Investment Strategy

HDFC Multi Cap Fund manager will follow a mix of top-down and bottom-up approach to select stocks – choosing approximately 60-75% in Large and Mid-Caps & approximately 25-40% in Small Caps. The focus would be on companies having secular growth and market leaders across sectors. Valuation is also taken care of, as they are critical for long term wealth creation and earnings growth. The scheme will aim to capture opportunities across growth, value and turnaround companies. Scheme is suitable for investors with a medium to long term investment horizon.

Views expressed herein involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied herein. HDFC Mutual Fund/AMC is not indicating or guaranteeing returns on any investments. Readers should seek professional advice before taking any investment related decisions and alone shall be responsible. *Source - Kotak Institutional Equities.




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Tags: #Features
first published: Nov 25, 2021 04:20 pm
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