HDFC Equity Fund

HDFC Equity Fund is managed by a ‘celebrated’ manager Prashant Jain. Rakesh Vyas joined him in May 2012. He has an exemplary track record. The fund has consistently topped the charts in most years since its inception. This is a good fund to hold on to for the long term.

Where does HDFC Equity Fund invest your money?

HDFC Equity Fund is a multi-cap fund. About 65.63% of the fund’s money is allocated to stocks of large companies, 23.81% to stocks of mid cap companies and 6.39% to those of small size companies. Large cap stocks bring stable returns but it is the mid cap stocks that bring in bumper returns.

Suitable for what?
  • Child's education
  • Child's marriage
  • Planning for retirement
  • Home Purchase
Not suitable for?
  • Creating wealth 
  • Short term needs
  • Lifestyle needs
How much to invest?

Minimum one time investment is Rs 5000 and minimum SIP is Rs 500 per month. You can make HDFC Equity Fund as part of your core portfolio. Core portfolio is investments that are made for your basic goals and makes up about 70% of your investment portfolio. Do not make the mistake of investing in too many mutual fund schemes. At any point of time do not have more than two mutual fund schemes in your core portfolio.

Our recommendation for fresh investment
Recommended
Our recommendation for existing investment
Recommended
How has HDFC Equity Fund performed in the past?

If you had invested Rs 1 lakh when the fund was launched in Jan 1995, your value of investments would be around Rs 28.52 lakhs. If you had invested Rs 1 lakh for 5 years, your value of investments would be around Rs 1.58 lakhs. The performance has been better or similar to other large cap mutual funds. The fund has been giving 9.62% returns for those who have stayed invested for the past 5 years.

Assume you had invested Rs 10,000 every month inHDFC Equity Fund through SIP for the past 5 years today you would have around Rs 8.34 lakhs.

How will HDFC Equity Fund perform in the future?

Needless to say no one can predict the future of markets. We have firm belief in the future prospects of the Indian economy. If the Indian economy grows at 9% then the leading companies tend to do well. When the companies do well their stock prices follows their performance. So if you expect the economy to grow at 8% then you can expect top performing mutual funds to give you returns in excess of 14%.

Mutual fund schemes that have exposure to mid-size companies tend to show results when their bet on few companies comes true. We advise you to avoid too much of star gazing and future prediction. Be reminded that equities are one of the asset classes that have the potential to beat inflation. Your aim for core portfolio should be to beat inflation.

When to review the performance?

Once you invest in the fund do not get into the habit of checking the NAV daily or monthly. Review the performance once a year. Too much attention is not good.

What charges apply?

A onetime fee of Rs 100 is charged on investments over Rs 10, 000 made through distributors. If you are a first time investor in mutual funds an additional Rs 50 is charged to cover KYC expenses. This is deducted from your investment and can be skipped if you buy directly from the mutual fund via their website or offices.

If units are sold within a year an exit load of 1% is deducted from your total returns. No exit load applies for units withdrawn post one year. Expense ratio of HDFC Equity Fund is 2.18%. This is charged to recover the fund management company’s expenses on securities’ transactions, commissions, registrar fees, etc. Your mutual fund returns will be total returns less expense ratio. 

When to enter?

Now! There is no good time to invest rather than now. Do not try to time the market and especially so if it is an SIP. Do not follow news channel and other experts to know the right time to invest. In the long run it does not matter. Mutual fund is unlike a stock where you are looking at the right price. This job will be done by the mutual fund scheme manager. If you have planned your investments and decided on the amount you want to invest do not think further, just go ahead.

When to exit?

Withdraw when your goals are close to achievement. Do not remove the money when the markets go up or down. Do not panic. Stick to your goals.

What are the tax implications?

The returns in a mutual fund are absolutely tax free, provided you did not withdraw within 1 year. 

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