Skip to main content

Mutual Fund Review: HDFC Mid-Cap Opportunities

HDFC Mid-Cap Opportunities' increased allocation to value stocks in 2010 helped it check volatility in returns…

Strategy


The fund aims to generate appreciation by investing predominantly in mid-cap stocks. The risk of holding such stocks is reduced by maintaining a well diversified portfolio. While the portfolio will primarily focus on a buy-and-hold strategy at most times, it will balance the same with a rational approach to selling when the valuations become too demanding even in the face of reasonable growth prospects in the long run. The key will be to identify stocks with room for PE multiples to expand if the company transitions from a small to mid and eventually a large-cap stock. The fund may also seek investment opportunity in the ADR / GDR / foreign equity and debt securities up to a maximum 25 per cent of net assets.

 

Our View


This fund is mandated to invest at least 70 per cent in mid-cap stocks and 5 per cent in small-cap stocks to generate capital appreciation. It may also take derivatives positions based on the opportunities available.


Launched in June 2007, it made its mark the very next year by simply not collapsing like a pack of cards. It contained the 2008 downside a lot better than its peers because of its then closed-end status. That year the fund also managed to outperform its benchmark, the CNX Midcap. And, with no redemption pressure, the fund retained over 92 per cent equity allocation throughout 2008, before the market started to turn around in 2009. In 2010, the fund turned open ended.


If one looks at the long-term return as well as the annual returns of 2009 and 2010, this fund has emerged a winner.

 

The Verdict


The fund increased its exposure to value stocks in 2010. That helped it turn in a good performance last year and also checked volatility in its returns.

 

Portfolio Insight


• Banking, Capital Goods, Pharmaceuticals and Auto & Auto ancillaries are the top sectors.
• The fund was heavy on Consumer Goods up to April 2009 but steadily reduced exposure, a strategy contrary to peers. The profits from the sector, though, were handsome.
• The portfolio comprises around 50 stocks.
• On an average 60 per cent of the portfolio is in mid caps and 30 per cent in small caps.
• Stock selection is key to this fund's success. Vesuvius India is a case in point. It is a niche player in molten metal, glass and renewable energy. Other picks that have aided growth are NRB Bearings and Grindwell Norton.

 

Popular posts from this blog

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...

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...

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

FCCB buyback

WITH dismal share valuations causing bondholders to redeem, and not convert their foreign currency convertible bonds ( FCCBs ), which until early this year were regarded as one of the most preferred options for raising corporate debt, suddenly seem to have become millstones around the necks of issuers. It is the redemption pressure on cash-starved issuers, coupled with the need to preserve liquidity by mitigating further forex outflow, which seems to have prompted the Reserve Bank of India ( RBI ) to issue the circular permitting buyback of FCCBs. As per the circular, issuers can now buyback FCCBs under the automatic route up to any limit out of existing foreign resources or by raising fresh external commercial borrowings (ECBs,) if effected at a minimum discount of 15% on the book value. Further, FCCBs up to $50 million can be bought back with prior RBI approval out of rupee resources representing “internal accruals”, if effected at a minimum discount of 25% on the book value. I...
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