HDFC Midcap Opportunities Fund : Fund Review

HDFC Midcap Opportunities Fund is ranked second in its category of mid-cap funds. The fund manager, Chirag Setalvad is considered one of the best portfolio managers in the small and mid-cap category according to Morningstar. He was with the fund since its inception and has been delivering remarkably consistent performance is a very unpredictable segment. The fund gave 15.12% annualized return since its inception in June 2007. This fund provides diversification to an investor’s equity mutual fund portfolio.

 

 

Performance

HDFC Midcap Opportunities Fund is a very consistent player in a very volatile segment. Its returns have consistently beaten its benchmark and category average and remained in the top 5 funds of the category. From the past 7 years, it has retained its rank intact. Its popularity has led to a rapid increase in its size but that hasn’t affected its returns.

HDFC Midcap Opportunities Fund has beaten its category by 0.3-2 percentage points and its benchmark by 2-5 percentage points in the 3 and 5-year returns. While its peers have struggled to deliver a good performance during the bear phase, this fund has performed better than them in the last year. The fund has been consistently performing better than the category average.

Fund1 Year Return (%)3 Year Return (%)5 Year Return (%)
HDFC Mid-Cap Opportunities Fund-12.40%12.89%20.80%
L&T Midcap Fund-14.72%14.37%24.17%
Franklin India Prima Fund-10.01%12.53%21.69%
DSP Midcap Fund-11.54%12.97%21.25%
Kotak Emerging Equity Scheme-12.50%13.02%23.50%

A SIP investment of Rs 5,000 a month in HDFC Midcap Opportunities Fund started 5 years ago is worth Rs 3.90 lakhs now. A profit of Rs 0.90 lakhs in just 5 years.

Fund Information

HDFC Midcap Opportunities Fund is one of the top funds in the mid-cap category. The fund manager, Chirag Setalvad follows detailed and exhaustive research to pick stocks for the portfolio. He focuses on quality metrics like ROCE and ROE. The strategy used by him is to identify companies with reasonable growth prospectus, sound financial strength, and a sustainable business model. He targets the less discovered stocks at reasonable valuations.

HDFC Midcap invests 1.76% in large caps, 65.11% in mid-caps, and 27.30% in small caps and the rest 5.84% goes is held in cash. The fund maintains a well-diversified portfolio across sectors at all times.

HDFC Midcap believes in diversification with 64 stocks in the portfolio. The top five holding sectors constitute 60.71% of the portfolio. These include financial services (22.81%), engineering (11.60%), chemicals (9.92%), automobile (8.44%), and health care (7.94%).

Recommendation

HDFC Midcap Opportunities Fund is ideal for long-term goals. Investors whose risk-taking ability is high can look at investing in this fund. The fund accepts both lump sum and SIP investments. This fund has higher ups and downs (volatility) than other equity funds but can yield much better returns. Invest in this fund for an investment horizon of at least 5 years to give the best results. Do not look at the returns for this fund in short-term. The short-term returns can be manipulative.

Fund NameHDFC Mid-Cap Opportunities Fund
Launch DateJune 25th, 2007
AUMRs 21,085Cr
Return (Returns greater than 1 year are annualized)Since Launch: 15.12%
1 Year: -12.40%
3 Year: 12.89%
5 Year: 20.80%
Expense Ratio2.36%
Fund Category RiskHigh
Investment PlanGrowth
Minimum Investment Horizon5+ years
Minimum InvestmentRs 5,000
Minimum Additional InvestmentRs 1,000
Exit Load1% if withdrawn within 1 year
Fund ManagerChirag Setalvad
Rakesh Vyas

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