With 28% in debt securities HDFC Hybrid Equity Fund offered a 94.6% returns in last 5 years

HDFC Hybrid Equity Fund offers a balanced approach, combining significant equity exposure with a stable debt component. Its diversified portfolio and active management strategy aim to deliver robust long-term returns. However, its higher volatility and aggressive risk profile make it suitable for investors with a higher risk tolerance and a long-term investment perspective. The fund’s strong performance and improved Crisil ranking underscore its potential as a viable investment option in the aggressive hybrid category.

Overview

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Fund Type: Aggressive Hybrid Fund
Fund Size: ₹52,874.12 Cr
Expense Ratio: 0.8% (Category average: 0.74%)
Crisil Rank: Updated from 3 to 2 in the previous quarter
NAV (may 2024): 105.91
Benchmark: NIFTY 50 Hybrid Composite Debt 65:35 Index
Risk-O-Meter: Very High

HDFC Hybrid Equity Funds Investment Strategy

HDFC Hybrid Equity Fund follows an aggressive hybrid strategy by maintaining a significant allocation to equities while holding a substantial portion in debt securities.

  • Equity Investments (68.55%):
    • Large Cap Stocks: 45.98%
    • Small Cap Stocks: 13.65%
  • Debt Investments (27.86%):
    • Government Securities: 8.33%
    • Low Risk Securities: 18.99%

HDFC Hybrid Equity Funds Growth Performance

Comparative 

Category 1 D 1 M 3 M 6 M YTD 1 Y 2 Y 3 Y 5 Y
This Fund 0.13% 0.89% 3.85% 12.38% 6.48% 19.97% 18.19% 14.22% 14.27%
Nifty 50 0.19% -0.33% 2.49% 11.91% 3.68% 21.50% 16.53% 13.06% 13.56%
Benchmark: NIFTY 50 Hybrid Composite Debt 65:35 Index 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Category Average 0.25% 0.88% 4.94% 14.54% 8.68% 27.98% 19.48% 14.86% 14.69%
Category Rank 18/28 18/30 23/30 22/30 23/30 28/30 17/30 14/30 12/27
Best in Category 1.07% 2.74% 8.94% 24.33% 18.40% 52.23% 33.99% 23.12% 24.07%
Worst in Category -0.02% -0.88% 2.07% 8.80% 4.29% 15.79% 11.85% 9.09% 10.39%

1-Month Performance

  • Absolute Returns: 0.76%
  • Rank within Category: 13 out of 30

Over the past month, HDFC Hybrid Equity Fund has exhibited a modest growth of 0.76%. This performance outpaces the category average of 0.64%, placing the fund in the upper half of its peer group. The short-term performance indicates the fund’s ability to generate returns even in a relatively brief investment horizon.

2-Year Performance

  • Absolute Returns: 39.24%
  • Rank within Category: 17 out of 30

When evaluating the fund over a 2-year period, it shows a substantial growth of 39.24%. This translates to an annualised return of 17.97%, demonstrating the fund’s ability to deliver strong performance over a medium-term horizon. Although the fund’s returns are slightly below the category average of 19.32%, it still ranks relatively well within its category, securing the 17th position out of 30.

5-Year Performance

  • Absolute Returns: 94.60%
  • Rank within Category: 12 out of 27

Over the long term, specifically a 5-year investment period, HDFC Hybrid Equity Fund has delivered impressive returns. An initial investment of ₹10,000 has grown to ₹19,460.10, resulting in an absolute return of 94.60%. This equates to an annualised return of 14.23%. While these returns are slightly below the category average of 14.63%, the fund remains competitive, ranking 12th out of 27 in its category. This indicates the fund’s potential for long-term wealth creation, making it an attractive option for investors seeking substantial returns over a longer horizon.

HDFC Hybrid Equity Funds Portfolio Analysis (as of 30th April 2024)

Portfolio Turnover Ratio: 40.54% (Category average: 234.47%)
Number of Stocks: 40 (Category Avg: 54.10)
Equity Holdings: 68.55%
Debt Holdings: 27.86%
Other Holdings: 3.59%

Top Equity Holdings:

  • ICICI Bank Ltd. (7.27%)
  • HDFC Bank Ltd. (6.54%)
  • Larsen & Toubro Ltd. (4.88%)
  • Reliance Industries Ltd. (4.67%)
  • State Bank of India (4.47%)

Risk Ratios 

  • Standard Deviation: 8.47 (Category Avg: 8.41)
  • Beta: 1.38 (Category Avg: 0.82)
  • Sharpe Ratio: 1.05 (Category Avg: 0.93)
  • Treynor’s Ratio: 0.06 (Category Avg: 0.13)
  • Jensen’s Alpha: 4.63 (Category Avg: 2.9)

HDFC Hybrid Equity Funds Growth Strategies

HDFC Hybrid Equity Fund implements several strategies to achieve growth and stability:

  • Diversified Equity Portfolio: The fund invests in a mix of large-cap and small-cap stocks to balance growth potential and stability.
  • Debt Allocation for Stability: Nearly 28% of the portfolio is allocated to debt securities, including government and low-risk securities, to provide a buffer against market volatility.
  • Long-Term Investment Horizon: The fund’s strategy is suitable for investors with a long-term horizon, ideally 3–4 years, aiming for high returns while being prepared for moderate losses.

Tax Treatment

  • Long-Term Capital Gains (LTCG): If held for more than one year, LTCG tax of 10% applies on gains exceeding ₹1 lakh.
  • Short-Term Capital Gains (STCG): If held for less than one year, STCG tax of 15% applies.

Disclaimer: The information provided in this article is for educational and informational purposes only. It should not be considered as investment advice or a recommendation to invest in any particular mutual fund or asset class. Past performance does not indicate future results, and investors should research and consult with a financial advisor before making investment decisions. Investing in mutual funds involves risks, including the possible loss of principal invested.