HDFC Flexi Cap Fund: Flexing Its Way Across Market Cycles

Very few funds meet investors’ expectations of delivering superior returns across market cycles, and HDFC Flexi Cap Fund is one of them. Its growing size reflects its stronghold on investors’ portfolios by consistently meeting their expectations.

Previously known as HDFC Equity Fund, it is one of the oldest equity schemes of HDFC fund house (launched in 1995). On January 29, 2021, HDFC Mutual Fund changed the name of HDFC Equity Fund to HDFC Flexi Cap Fund after the introduction of the flexi-cap category.

This fund has set numerous records, not only for its performance, but also for its fund management. It had one of the longest-serving fund managers in the industry, Prashant Jain, from June 2003 to July 2022. Now, Roshi Jain is at the helm and has not disappointed the investors.

Portfolio

Despite being a flexi-cap fund, it does not go overboard in mid-cap and small-cap stocks or momentum sectors to boost return. Ever since its mandate was changed to flexi-cap, its exposure to large-caps never went below 70 per cent. At times, this strategy resulted in underperformance—like in 2019 and 2020, when the fund underperformed its peers. It strategically positions itself in sectors exhibiting earnings recovery potential and reasonable valuations, while remaining underweight in expensive sectors.

Currently, the fund is overweight on healthcare, and IT—around 24 per cent of the portfolio on account of lower valuation and better earnings growth. It follows a concentrated portfolio strategy, and holds around 46 stocks which seem concentrated given the fund size, and are lesser in number compared to its peers.

Performance

With a splendid track record of wealth generation over 28 years, it has adeptly navigated through market excesses and meltdowns. Also, after its underperformance in 2020, it has made a strong comeback. Over one,- three- and five-year periods, it has been among top five schemes in its category.

OLM Take

Investors may add this fund to their core portfolio given its track record across market cycles.

kundan@outlookindia.com