Investing doesn’t always require a big sum upfront; sometimes, just a few thousand a month can build substantial wealth over time. The HDFC Large & Mid Cap Fund, a well-established equity mutual fund with a solid track record, is a good example. Investors who consistently invested a small SIP of Rs 2,500 monthly over 30 years in this fund have reportedly grown their investment to an impressive Rs 1.5 crore, thanks to steady returns, compounding, and disciplined investing.
Here’s how this mutual fund has performed, why it works, and what makes it unique.
Overview of HDFC Large & Mid Cap Fund: A Longstanding Performer
The HDFC Large & Mid Cap Fund has a long history, launched back in February 1994 as a large-cap fund. Over time, it evolved to include a mix of both large and mid-cap stocks, balancing the stability of established large-cap companies with the high-growth potential of mid-cap stocks. In 2018, it officially became a large-and-mid-cap fund to enhance diversification, allowing it to participate in both stable and high-growth sectors.
Key Features of the HDFC Large & Mid Cap Fund:
- Category: Large & Mid Cap
- Rating: 4-Star by Value Research
- Asset Under Management (AUM): Rs 23,953.95 crore (as of November 2024)
- Expense Ratio: 1.66% (regular plan), 0.84% (direct plan)
- Fund Manager: Gopal Aggarwal, with 17+ years of fund management experience
Investment Strategy: Balancing Stability and Growth
The HDFC Large & Mid Cap Fund strategically invests in a balanced mix of large and mid-cap stocks. Currently, about 48.2% of its portfolio consists of large-cap stocks, 36.5% is invested in mid-cap stocks, and a small portion, 12.5%, goes to small-cap stocks. This allocation provides a unique blend of stability and growth potential. Large-cap stocks offer a more secure investment, while mid-cap and some small-cap stocks present higher growth opportunities.
The fund’s primary goal is to achieve long-term capital appreciation. For risk management, HDFC’s fund managers carefully select stocks after rigorous research, focusing on a diversified portfolio that minimizes risks.
Historical Returns: Consistency Over the Long Run
One of the most attractive aspects of the HDFC Large & Mid Cap Fund is its historical performance. Over its 30-year history, this fund has provided solid returns across different time frames, giving investors confidence in its consistency. Here’s a look at its performance in terms of CAGR (Compound Annual Growth Rate):
- 1 Year Return: 40.00% (Direct), 38.81% (Regular)
- 3 Year Returns: 21.38% (Direct), 20.37% (Regular)
- 5 Year Returns: 24.69% (Direct), 23.86% (Regular)
- 10 Year Returns: 14.69% (Direct), 14.24% (Regular)
- 30-Year Returns (since inception): 15.01% (Direct), 13.21% (Regular)
These returns show how the fund has consistently provided attractive gains, especially for long-term investors.
How a Rs 2500 Monthly SIP Became Rs 1.5 Crore
Let’s break down how a small SIP of Rs 2,500 could grow to Rs 1.5 crore over 30 years in this fund. Here’s an example calculation based on the fund’s 14.86% annualized return:
- Monthly SIP: Rs 2,500
- Lump Sum Investment (at start): Rs 25,000
- Total Investment over 30 Years: Rs 9.25 lakh
- Total Fund Value after 30 Years: Rs 1,52,91,270 (approx. Rs 1.5 crore)
This impressive growth is a result of consistent investing and the power of compounding over a long period. In this case, the value grew significantly even though the monthly contribution was modest.
Benefits of the HDFC Large & Mid Cap Fund
This fund offers several advantages for those looking to grow wealth over time:
- Strong Growth Potential: With exposure to mid-cap stocks, investors have the potential for high returns over time.
- Risk Management: The large-cap portion provides a stable foundation, balancing the overall risk.
- Diversified Portfolio: By investing across large, mid, and small-cap stocks, the fund is better positioned to handle market volatility.
- Compounding Effect: Regular SIPs and reinvested returns have a compounding effect, increasing the fund’s value over the years.
Important Points to Consider Before Investing
While this fund has performed well historically, here are some essential points to keep in mind:
- Market Risk: Equity mutual funds are subject to market risks, and there is no guarantee that past performance will continue in the future.
- High-Risk Level: This fund is rated as very high risk, so it’s suitable for investors who can tolerate short-term volatility.
- Long-Term Investment: This fund is best for long-term investors who can stay invested for at least 5-7 years.
How to Get Started with HDFC Large & Mid Cap Fund
If you’re interested in starting an SIP or making a lump sum investment in this fund, you’ll need to complete a simple process:
- Research and Decide: Make sure this fund aligns with your risk tolerance and investment horizon.
- Choose Direct or Regular Plan: Direct plans usually have lower expense ratios but require self-management, while regular plans are managed through distributors.
- Complete KYC: You’ll need KYC documents like PAN, Aadhar, and bank details to invest.
- Set Up SIP: Decide on a SIP amount based on your budget and financial goals, and set up an automatic monthly transfer.
Final Thoughts
The HDFC Large & Mid Cap Fund shows that with disciplined investing, even a small SIP can yield big returns over the years. With a mix of large and mid-cap stocks, the fund offers a balanced approach to growth and stability, making it a popular choice for investors aiming for long-term wealth creation.
(Disclaimer: The purpose of this article is only to provide information and not to give advice on investing in any scheme. Take investment related decisions only after taking the advice of your investment advisor.)
