HDFC Mid-Cap Opportunities

AUM Rs.2803 CRORE ............................................................ AS ON DECEMBER 31, 2013

NAV Rs.21.35 ...................................................................................AS ON MARCH 14, 2014

A fund which had outperformed its benchmark index by a staggering 1660 basis points in the last one year deserves a big round of applause. This is exactly what has happened with HDFC Mid-Cap Opportunities fund. Its benchmark CNX Mid-cap has generated a return of 4.21 per cent whereas the fund has generated a return of 20.81 per cent for its holders. Not only this, if you had invested Rs.1000 per month for the past three years, then the incremental value of Rs.,36000 investment now stands at Rs.47903. This shows the inherent strength of the fund to create value in long-term in the mid-cap space. Managed by Chirag Setalvad since May 2007, the AUM of the fund has increased from Rs.1680.41 crore in 2007 to Rs.12802.96 crore as of December 31, 2013, witnessing a CAGR of nine per cent.

The fund works with the aim of generating long-term capital appreciation from a portfolio that largely constitutes of equity and equity-related securities of mid and small-cap companies. At present, the mid and small-cap companies comprise of 88 per cent of the portfolio, while the rest is invested in large-cap companies. The fund in the longer run as-well-as in the shorter term has been able to perform better. This can be validated by the fact that the fund has been able to beat its category returns in the span of three years, one year and also in the three-month period.

The fund has spread its holding across the mid and small-cap companies. However, the concentration is a bit tilted towards the mid-cap companies which comprise of 64 per cent of the total holdings, while small-cap constitutes 23.26 per cent. At present the scheme has a portfolio of 65 stocks. Around 97 per cent of the scheme is invested in equities and the rest is in cash.

The stocks that have generated major gains for the fund includes names like Aurobindo Pharma, IPCA Labs, NIIT Technologies, SKF India, AIA Engineering to name a few. The investment of the fund is well diversified. The top five sectors comprise more than 63.56 per cent of the portfolio in a fund. The top five sectors are Healthcare (17.40 per cent), Financial (14.28 per cent), Technology (11.78 per cent), Engineering (10.80 per cent) and Chemicals (9.30 per cent).

The fund manager has been vigilant to shuffle the portfolio. In the month of February 2013, banks had the highest weightage, constituting 16.39 per cent of the portfolio. But in the month of February 2014, the healthcare sector recorded the highest weightage followed by financials. This shows the experience of the fund manager and keeping up with its name, the efforts taken by them to find the right opportunity for the betterment of their investors.

The improved performance of the fund has not come at the cost of risk taking. This statement can be substantiated by looking at the sharp ratio which stands at 0.50. The alpha of the fund stands at 8.48, which represents the excess return that the fund has generated at a given level of risk.

The fund can be an ideal candidate to form a part of the mutual fund portfolio of risk taking as-well-as risk averse investors. However, an SIP route for investors seems to be the best way to invest DS in this fund scheme.