Skip to main content

HDFC Prudence Fund

Now This fund is called HDFC Balanced Advantage Fund 

Equity-oriented products of mutual funds have seen their strongest-ever investor appetite in the past year, but one scheme has stood out in the inflow deluge. HDFC Prudence Fund, an equity oriented balanced scheme, has seen assets under management soar 250% or `17,000 crore in the last 15 months to `24,479 crore. The balanced fund category's assets increased 147% in the period. The jump in assets has made HDFC Prudence the largest scheme that is taxed as an equity product in the domestic mutual fund industry .

So, what makes the 23-year-old product so special?

The fund, managed by Prashant Jain, widely regarded as one of the most competent money managers, has delivered an annualised return of 19.42% since its inception. In the last 10 years, the fund has returned 14.4% annually against the category average of 10.9%. A balanced fund invests in a mix of equity and debt. This product enjoys the taxation benefit of an equity scheme if it invests at least 65% in stocks.


While higher returns by the fund has been a draw for investors, another reason that has resulted in heightened interest in the product has been its dividend payout.


Wealth managers said the scheme's assets saw a spike after it started offering a monthly dividend payout option since January 2016.Since then, the fund has been paying a dividend of `0.3 monthly which on a face value of `10, translates into a yield of 12% per annum.


It is clear that ever since the fund started its monthly dividend option in 2016, the AUM has seen a sharp jump. The other good fund in its sta ble, HDFC Balanced, which does not have a monthly dividend option, did not see such a sharp jump in AUM


HDFC Prudence, which had been paying an annual dividend every year since 1999, changed the option to monthly dividend in 2016. Since dividend income is tax free in hands of investors and bank deposit rates were on a downward trend, many schemes were offering monthly dividends, to attract investors.

Between March 2015 and January 2016, a lot of fund houses started to offer dividend plan in their hybrid schemes. However, HDFC Prudence has been beneficiary of this trend due to their high monthly dividend yield

Other funds in the category Canara Robeco Balance, ICICI Prudential Balanced Fund, L&T India Prudence and Tata Balanced too have been paying monthly divi dends, said wealth managers.

Monthly tax-free dividend of 12% attracted both savvy HNIs as well as retirees HDFC Prudence. Jain's strategy of betting on an industrial recovery along with interest rates heading lower has helped the fund return 27% over the last year, further attracting investors.

Advisors say investors with a time frame of five years and above can hold on or buy balanced funds, but those buying it merely with the objective of earning high dividend should be ready for lower dividends in case the markets correct.

Fund houses can pay regular dividends only out of the distributable surplus. Investors' depending on balanced funds for regular dividends may be caught on the wrong foot if the market changes track and moves in a southward direction for some time




Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds. Save Tax Get Rich

For further information contact SaveTaxGetRich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

OR

Call us on 94 8300 8300




 

Popular posts from this blog

National Savings Certificate

National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...
Read more

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...
Read more

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...
Read more

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities. Basic information on Mutual Funds People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal. Functioning of Mutual Funds You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any t...
Read more

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now