HDFC Mid-Cap Opportunities

AUM `3160.3 Crore .............................................................. AS ON MARCH 31, 2014

NAV `23.93 ............................................................................AS ON MAY 9, 2014

The primary objective of any fund manager is to generate returns that outperform its benchmark and garner better yields for its investors. HDFC Mid-Cap Opportunities fund is one which had proved its mettle in generating better returns as compared to its peers as well as its benchmark over a period of time. The performance is well received by the investors and is reflected in the growth of its assets under management that has increased by 28 per cent on a CAGR basis for the last seven years to stand at `3160 crore as of March 31, 2014.

Managed by Chirag Setalvad, since 2007, the performance of the fund is indeed envious. In the last one year, not only did the fund outperform its category returns by 240 basis points, but it had also outperformed its benchmark CNX Midcap by 229 basis points. The fund had generated a return of 33.17 per cent in the last one year. In the 3-year and 5-year period the fund had outperformed its peers by 431 basis points and 595 basis points respectively

Looking at the sector allocation, the top five sectors constitute 63 per cent of the portfolio. The top five sectors are viz. Financial (17.82 per cent), Healthcare (15.37 per cent), Engineering (11.72 percent) Technology (9.26 per cent) and Chemicals (8.95 per cent). The top five stocks that form the portfolio are Aurobindo Pharma (3.92 per cent), Ipca Laboratories (3.65 per cent), Supreme Industries (3.48 per cent), MindTree (2.78 per cent) and NIIT Technologies (2.66 per cent). Mid-cap and small-cap companies constitute 86.19 per cent while the rest is held by exposure to some large-cap stocks. Looking at the portfolio what comes to our mind is that the fund manager manages to hold on to itself during bear phases and in turn is able to provide stable returns when the markets move in the northbound direction. The fund has a diverse portfolio of 63 stocks and the fund manager does not go overboard with higher allocation to any particular sector. The fund manager manages the right proportion of sectors and quality midcap stocks, which has helped the fund clock top quartile performance consistently across all time periods. The improved performance of the fund has not come at the cost of risk taking. Th is statement can be substantiated by looking at the sharp ratio which stands at 0.48. The alpha of the fund stands at 8.39, 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 adverse investors. With an above average return potential the fund looks to be a suitable midcap fund to invest.