If you are looking for a mutual fund that invests in a concentrated portfolio of high-quality stocks, HDFC Focused 30 Fund could be the one for you. In this guide, we will take a closer look at what HDFC Focused 30 Fund is, its features and benefits, performance and historical returns, portfolio composition and investment strategy, risks and considerations, how to invest, comparison with other similar funds, and expert opinions and reviews. By the end of this guide, you will have a better understanding of whether HDFC Focused 30 Fund is the right investment for you.
Introduction to HDFC Focused 30 Fund
HDFC Focused 30 Fund is an open-ended equity mutual fund that primarily invests in a concentrated portfolio of up to 30 high-quality stocks across market capitalizations and sectors. The fund aims to generate long-term capital appreciation by investing in companies with sustainable competitive advantages, strong management teams, and attractive growth prospects. Launched in June 2010, HDFC Focused 30 Fund has consistently outperformed its benchmark, the Nifty 500 TRI, and its peers in the focused category.
What is a focused mutual fund?
A focused mutual fund is a type of equity mutual fund that invests in a concentrated portfolio of typically 20-30 stocks, as opposed to a diversified mutual fund that invests in a larger number of stocks across sectors and market capitalizations. The idea behind a focused mutual fund is to invest in a select number of high-conviction stocks that the fund manager believes have the potential to outperform the broader market over the long term. A focused mutual fund is suitable for investors who are willing to take on higher risk for potentially higher returns and have a long-term investment horizon.
Features and benefits of HDFC Focused 30 Fund
One of the key features of HDFC Focused 30 Fund is that it invests in a concentrated portfolio of up to 30 high-quality stocks across market capitalizations and sectors. This allows the fund manager to focus on his or her best ideas and take high-conviction bets on companies with strong fundamentals and attractive growth prospects. The fund has a bottom-up stock-picking approach and invests in companies with sustainable competitive advantages, strong management teams, and attractive valuations.
Another feature of HDFC Focused 30 Fund is that it has a low expense ratio of 1.25%, which is lower than the average expense ratio of the focused category. This means that the fund charges a lower fee for managing your money, which can have a significant impact on your returns over the long term.
HDFC Focused 30 Fund also offers the benefit of diversification within a concentrated portfolio. The fund invests across market capitalizations and sectors, which helps to reduce concentration risk and improve the overall risk-return profile of the portfolio.
Performance and historical returns of HDFC Focused 30 Fund
HDFC Focused 30 Fund has delivered strong performance since its inception in June 2010. As of August 31, 2021, the fund has generated a compounded annualized return of 17.32% since inception, which is significantly higher than its benchmark, the Nifty 500 TRI, and its peers in the focused category. The fund has also outperformed the benchmark and the category average over the 1-year, 3-year, 5-year, and 10-year periods.
It is worth noting that past performance is not indicative of future results, and mutual fund investments are subject to market risks, including the possible loss of principal value.
Portfolio composition and investment strategy of HDFC Focused 30 Fund
HDFC Focused 30 Fund invests in a concentrated portfolio of up to 30 high-quality stocks across market capitalizations and sectors. The fund manager, Mr. Gopal Agrawal, has a bottom-up stock-picking approach and invests in companies with sustainable competitive advantages, strong management teams, and attractive valuations.
As of August 31, 2021, the top holdings of HDFC Focused 30 Fund included HDFC Bank, ICICI Bank, Infosys, Kotak Mahindra Bank, and Bajaj Finance. The fund has a bias towards financials, technology, and consumer discretionary sectors, which together account for over 60% of the portfolio. The fund has a relatively low exposure to energy, utilities, and materials sectors.
Risks and considerations when investing in HDFC Focused 30 Fund
Investing in HDFC Focused 30 Fund involves certain risks and considerations that investors should be aware of. One of the key risks of investing in a focused mutual fund is concentration risk. Since the fund invests in a concentrated portfolio of up to 30 stocks, there is a higher risk of underperformance if one or more of the stocks do not perform as expected. This risk can be mitigated to some extent by investing in a diversified portfolio of mutual funds across asset classes and categories.
Another risk of investing in HDFC Focused 30 Fund is market risk. Like all equity mutual funds, HDFC Focused 30 Fund is subject to market risks, including volatility and fluctuations in stock prices. Investors should be willing to accept higher risk for potentially higher returns and have a long-term investment horizon.
How to invest in HDFC Focused 30 Fund
Investing in HDFC Focused 30 Fund is easy and convenient. You can invest in the fund through any of the following modes:
- Online through the HDFC Mutual Fund website or mobile app
- Offline through a registered mutual fund distributor
- Directly through the HDFC Mutual Fund office
To invest in the fund, you will need to complete the KYC (know your customer) process, which involves submitting your identity and address proof documents. You can then select the HDFC Focused 30 Fund and invest through a lump sum or SIP (systematic investment plan) mode.
Comparison of HDFC Focused 30 Fund with other similar funds
HDFC Focused 30 Fund is one of the top-performing funds in the focused category, but there are other similar funds that investors can consider. Some of the other funds in the focused category include Axis Focused 25 Fund, SBI Focused Equity Fund, and Aditya Birla Sun Life Focused Equity Fund.
When comparing funds, investors should look at factors such as the fund’s performance track record, portfolio composition, investment strategy, expense ratio, risk-return profile, and fund manager’s experience and expertise.
Expert opinions and reviews on HDFC Focused 30 Fund
HDFC Focused 30 Fund has received positive reviews from various mutual fund experts and rating agencies. Morningstar, a leading mutual fund research firm, has assigned a 5-star rating to the fund, indicating that it has a strong track record of generating risk-adjusted returns. Value Research, another mutual fund rating agency, has given the fund a 4-star rating, indicating that it is a good investment option for investors.
Conclusion: Is HDFC Focused 30 Fund the right investment for you?
HDFC Focused 30 Fund is a top-performing focused mutual fund that invests in a concentrated portfolio of high-quality stocks across market capitalizations and sectors. The fund has consistently outperformed its benchmark and peers in the focused category, and offers the benefits of diversification within a concentrated portfolio. However, investing in the fund involves certain risks and considerations that investors should be aware of, including concentration risk and market risk.
If you are willing to take on higher risk for potentially higher returns and have a long-term investment horizon, HDFC Focused 30 Fund could be a good investment option for you. However, before investing, it is important to do your own research, consult a financial advisor, and ensure that the fund aligns with your investment objectives and risk profile.