HDFC Mutual Fund’s Focused 30 Fund has been making waves among investors for its outstanding performance, particularly over the last three and five years. Not only has this equity fund doubled investments in just three years, but it has also managed to triple them over a five-year period. These numbers have generated a lot of buzz in the mutual fund space, making it a go-to option for both lump sum and SIP (Systematic Investment Plan) investors. But what is driving this stellar performance? Let’s dive into the reasons behind the success of this multibagger scheme and explore its key investment strategies.
Why HDFC Focused 30 Fund is Thriving
The core reason behind any mutual fund’s success is its investment strategy and the choices made by its fund managers. The HDFC Focused 30 Fund is no different. Being an equity-oriented scheme, at least 65% of its assets must be invested in stocks. The fund follows a focused approach, holding a maximum of 30 stocks, allowing the fund managers to zero in on high-growth potential companies without being restricted by market capitalization. This means the portfolio can include large-cap, mid-cap, or small-cap stocks depending on market conditions, giving the managers flexibility to make the most of opportunities.
How Much Has HDFC Focused 30 Fund Delivered?
The performance data for this fund is impressive, particularly for long-term investors. Here’s a snapshot of returns on both lump sum and SIP investments:
Lump Sum Investments:
- Direct Plan 3-Year Annualized Returns: 28.18%
- Regular Plan 3-Year Annualized Returns: 26.51%
- Direct Plan 5-Year Annualized Returns: 25.49%
- Regular Plan 5-Year Annualized Returns: 24.00%
For instance, an investment of Rs 1 lakh in the direct plan of this scheme three years ago has grown to Rs 2,10,601 today. Over a five-year period, that same investment has tripled to Rs 3,11,204.
SIP Investments:
- Direct Plan 3-Year Annualized Returns: 33.62%
- Direct Plan 5-Year Annualized Returns: 32.21%
A monthly SIP of Rs 5000, invested over three years, would have grown to Rs 2,90,224 today, while over five years, the same SIP would now be worth Rs 6,60,362.
Investment Strategy of HDFC Focused 30 Fund
What makes the HDFC Focused 30 Fund stand out is its flexible investment strategy. The fund doesn’t restrict itself to one specific market capitalization. Whether it’s large-cap, mid-cap, or small-cap, the fund managers can invest in companies of all sizes, depending on what they believe will bring the best returns. This flexibility allows them to adapt to different market conditions.
Additionally, the fund sticks to a focused portfolio approach, investing in a maximum of 30 companies at a time. This allows the managers to closely monitor their investments and make better-informed decisions.
Where Does the Fund Invest?
As of August 31, 2024, the portfolio allocation of HDFC Focused 30 Fund is primarily concentrated in equities (86.23%). The rest is divided into cash and cash-like assets (9.74%), real estate (3.68%), and a small share in debt (0.35%).
When looking at the equity section, the fund’s portfolio heavily leans toward large-cap stocks, making up 81.34% of the holdings, while mid-cap stocks account for 10.53%, and small-cap stocks take up 8.13%. Here are the fund’s top holdings:
- ICICI Bank: 9.44%
- HDFC Bank: 9.14%
- Axis Bank: 8.37%
- HCL Technologies: 4.89%
- SBI Life Insurance: 4.65%
Key Metrics of HDFC Focused 30 Fund
Understanding the risk and costs involved is essential for any investment. HDFC Focused 30 Fund has a “Very High” risk rating, so it’s best suited for investors with a high-risk appetite looking to invest for the long term.
- Benchmark Index: NIFTY 500 Total Return Index
- 3-Year Benchmark CAGR: 17.68%
- 5-Year Benchmark CAGR: 22.13%
- Assets Under Management (AUM): Rs 14,858.09 crore
- Expense Ratio (Direct Plan): 0.50%
- Expense Ratio (Regular Plan): 1.67%
Is This Fund Right for You?
HDFC Focused 30 Fund is ideal for investors seeking long-term wealth creation and who are comfortable taking on higher risks associated with equity markets. While past performance is no guarantee of future returns, the consistent track record of this scheme makes it an attractive option for those aiming for strong returns over a 5-year or longer investment horizon. The fund’s flexible, focused investment strategy provides an edge in navigating different market conditions, making it a good choice for seasoned investors.
For those willing to take the plunge, whether through SIP or lump sum investments, HDFC Focused 30 Fund remains a reliable choice for wealth creation in the long term.
