Fund of Fortnight

Reason for recommendation 
The year 2018 has been bad for the equity market in general and was worse for the mid-cap and small-cap stocks. Their performance was reflected in the performance of mutual fund schemes dedicated to such categories. Nevertheless, there are funds that have always outperformed their categories.

  

HDFC Mid-Cap Opportunities fund is one of such fund that has consistently beaten its benchmark over the years. The fund selects high-quality mid-cap companies that are growing well and available reasonable valuations, with a focus on quality metrics like ROCE and ROE.

The current portfolio of the fund is well-diversified having 68 stocks and with no single stock holding more than 4 per cent of the total assets. Such diversification helps the fund to be less volatile. The fund’s portfolio has the highest allocation to the financial sector at 22 per cent, followed by engineering at 11.63 per cent. Rest all sectors have less than 10 per cent weightage. Hence, the fund is well-diversified in terms of sectors as well. Such diversification has helped the fund contain its losses in the previous bear market including 2008 and 2011.



Going ahead, the year 2019 is expected to be choppy atleast for the first half and hence we suggest this fund to our conservative readers.



*This might not be top ranked fund, however, looking at risk-reward opportunity we recommend this fund.
*Expected one year return is based on the assumption that current holdings remain constant.