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With the bellwether indices scaling record highs, investors are no doubt chary of entering the market. But investing through the SIP (systematic investment plan) route can help tide over market volatility. Investors seeking to invest in the mid-cap space could consider buying units of HDFC Mid-Cap Opportunities (HDFC Mid-Cap) through SIPs.
The fund has a proven track record of delivering good returns in the long run. Over the past five and 10-year periods, the fund has delivered 26 per cent and 18 per cent returns respectively, beating its benchmark — Nifty Free Float Midcap 100 returns of 19.9 per cent and 11.3 per cent, respectively.
The fund remains in the top quartile of funds across time frames. Over three- and five-year periods, the fund has outperformed its benchmark by 4-6 percentage points.Moreover, the fund has attracted huge inflows (assets under management above ₹16,000 crore) due to its steady performance.
HDFC Mid-Cap has beaten its benchmark 92 per cent of the times on a one-year rolling return basis over the last five years.
Performance and strategyThe fund has managed to contain the downside well during 2011 and also delivered positive return of 9.6 per cent in 2013, when its benchmark slumped 5 per cent. It performed well in the ensuing years as well.
About 93-97 per cent is invested in equities and the balance is held in cash and debt instruments. After marginally trimming the allocation in banking sector in early 2016, the fund subsequently increased its allocation to as high as 17.3 per cent in April 2017. It is the top preferred sector in the fund’s portfolio. The increased allocations in banking and transport sectors have paid off well in 2017.
On the other hand, the fund has marginally reduced its exposure in industrial products and pharma while upping its stake in the auto ancillary sector. The fund continues to hold the same array of sectors but with churn in the allocations. In the last one year, it added textiles and healthcare services to the portfolio and exited services and trading sectors.
The fund is now overweight on financials, FMCG, chemicals and automobile, whereas it is underweight in sectors such as healthcare, construction and energy.
HDFC Mid-Cap holds 76 stocks in its basket and the exposure to individual stocks is capped at 3 per cent, which diffuses the risk. It adopts a mix of growth and value strategy.
About 60 per cent of the portfolio allocations are towards mid-caps and 10 per cent in small-cap stocks.
Increased allocation in select large-cap stocks such as Adani Ports and MRF has yielded good returns.
Recent additions include Capital First, Mahindra Holidays and Delta Corp.
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