At the moment, we would not advise investors to park largesums in equities or equity mutual funds, given the way stocks have hit record highs. When you buy something at record highs, chances of making money dwindles even further. This means that Systematic Investment Plans or SIPs are the best bet, as you do not have to put lumpsum and the risk is averaged out.
Here are 5 HDFC Mutual Fund SIPs to consider. We are not saying that they are the best, but, what we are saying that if your looking at HDFC Mutual Fund SIPs, then below are a few options for you from equity as well as debt.
HDFC Balanced Fund
This is one of the biggest mutual fund schemes from the HDFC Mutual Fund stable. It has assets under management of nearly Rs 42,000 crores.
This is a hybrid fund, where the amounts are invested in both debt and equity. At the moment the fund has 75% exposure to equity, and the rest in debt and cash and cash equivalents.
The fund has generated a returns of about 55% in the last 1-year. The minimum SIP that one can start the plan is with Rs 500. As compared to other equity mutual funds, the risk here would be a little less, given that the fund has almost 25% exposure to debt, cash and cash equivalents. This would leave the fund manager some opportunity to buy at lower levels, should the markets fall.
HDFC Flexi Cap Fund
HDFC Flexi Cap Fund as the name suggests invests in companies with a small market capitalization or companies with a large market capitalization. It really depends on where the fund manager sees an opportunity.
An SIP investment of Rs 10,000 every month in the last 36-months would have grown to a corpus of Rs 5 lakhs. A Rs 1 lakh investment on the other hand would have fetched Rs 1.5 lakhs, if invested three year ago.
The minimum SIP investment required is Rs 500. Looking at the portfolio of HDFC Flexi Cap Fund would suggest that bulk of the money is invested in large caps like State Bank of India, ICICI Bank, Infosys and Larsen and Toubro. In the last 1-year HDFC Flexi Cap Fund has given a return of 68%. The substantial jump in returns in the last 1-year of equities, due to the sharp rally in the Sensex and the Nifty is one reason why we advocate SIPs.
HDFC Top 100
As the name suggests the company invests in the top companies, primarily from the largecap space.
HDFC Top 100 has generated a returns of around 57% in the last 1-year, in line with the sharp jump in the stock markets. The fund has sizeable assets under management of more than Rs 20,000 crores. The ratings of this fund is not great when compared to peers. Investors can look to invest Rs 500 as the minimum by way of Systematic Investment Plan.
We need to drive home the point once again that the Sensex is at a record high of 52,527 points and hence investing a large amount in equity mutual funds is risky. The HDFC Top 100 has invested almost all of the money in equities and has very little in terms of cash and cash equivalents.
HDFC Corporate Bond Fund
If you are looking at investing with no risk, then the HDFC Corporate Bond Fund would not be a bad bet. In fact, being a debt oriented scheme the risk is far less.
Interestingly, the HDFC Corporate Bond Fund has given a returns of 8% in the last 1-year, which really beats returns from even bank deposits. One can invest in the bond fund, through the SIP route, which would be Rs 500 a month.
The fund has exposure to high quality Government of India Sovereign paper, and debentures from the likes of NABARD and Ultratech Cement. The instruments in the portfolio look sound.
HDFC Medium Term Debt Fund
This is another fund that is good for those looking at debt options through the SIP route. The net asset value under the growth plan is Rs 44.22. The 1-year returns from the fund is 10%, which is really good for a debt fund.
One can invest through the SIP route for Rs 500 each month. Returns from debt funds would largely depend on how interest rates move in the economy. Overall, interest rates are expected to remain stable at the current levels.