Many of you have invested in mutual funds through HDFC or want to invest.
In this article, we will talk about why HDFC is one of the most popular AMCs in the country.
Let’s get started.
HDFC Asset Management Company is the second AMC to be listed in the stock exchange after Reliance Nippon Life Asset Management.
It is one of the largest mutual fund houses in the country, in terms of AUM and is led by Mr. Milind Barve.
|Mutual Fund||HDFC Mutual Fund|
|Sponsor||Housing Development Finance Corporation Ltd. / Standard Life Investments Ltd.|
|Trustee||HDFC Trustee Company Limited|
|CEO / MD||Mr. Milind Barve|
|CIO||Mr. Prashant Jain|
|Compliance Officer||Mr. Yezdi Khariwala|
|Investor Service Officer||Mr. John Mathew|
|Assets Managed||Rs. 306840.72 crore (Jun-30-2018)|
HDFC Asset Management Company
HDFC AMC is a Mumbai based Asset Management Company which is engaged in providing investment and saving products.
It is a joint venture between HDFC and Standard Life Investments Limited.
As of December 2017, it offers the following schemes:
- Equity-oriented schemes- 28
- Debt schemes- 91
- Liquid schemes- 3
- Other schemes- 5
HDFC AMC has been the most profitable asset management company in India in terms of net profit since fiscal year 2013, with a total AUM of INR 2,932.54 billion as of December 2017.
Its gains have increased every year since the first full year of operations in the financial year 2002.
It has been the largest mutual fund house in the country in terms of equity-oriented asset under management since the 4th quarter of 2011.
It has steadily risen to become one of the top two mutual fund houses in the country in terms of total average AUM since the month of August 2008.
As of 31 December 2017, its equity-oriented assets under management and non-equity-oriented asset under management constituted INR1,552.82 billion and INR1,379.72 billion, respectively, of its total AUM.
Its asset under management has increased at a CAGR of 27.1%, between 31st March 2013 and 31st December 2017.
1.It has a trusted brand name and lineage
2.It has retained its market leadership position in the Indian mutual fund industry.
3.It has consistently shown strong investment performance backed by comprehensive investment philosophy and risk management.
4. It focuses more on individual clients and follows a customer-centric approach.
5.It has an experienced management and investment team.
HDFC AMC’s financial performance (in INR crore)
|Profit after tax||318.7||357.8||415.5||477.9||550.2||721.6|
|Net margin (%)||40.7||39.6||39.0||32.0||34.6||38.6|
HDFC AMC came out with its IPO and got itself listed on the stock exchange recently.
It closed 65% above the allotment price and the investors who were allotted the issue proceeds gained a lot on the first day itself.
Many investors decided to sell the shares by taking the listing gain, whereas others who were interested in retaining the stock still have the scrip in their portfolio.
Few investors partly sold the stock and partly retained it for future earnings.
The stock is presently trading close to Rs. 1630 and investors willing to invest in it after analysing everything about the company can do so by buying scrips at a time or accumulating units of this scrip at different prices, so as to average out the prices.
Investors who applied for the IPO earlier, but did not get the allotment also followed a similar approach.
HDFC AMC stock listed at Rs 1,738 on the stock exchange, registered a healthy profit of 58% over the issue price of Rs 1,100 per share on the exchange and It crossed Rs 1,800 on the markets in intraday trade.
The scrip saw the second highest listing gains in 2018 and 6th highest since 2011. It ended at Rs.1,815.25 (up 65 percent).
HDFC has created an immense amount of wealth for shareholders and has been a defensive player in the market.
The HDFC group is backed by big foreign and Indian institutional investors, as well as mutual fund houses, because of its robust corporate governance and amazing performance.
This is why all HDFC Group companies including its AMCs trade at premium valuation. This is the fourth company from the HDFC Group to list itself in the market.
The only other competitor of HDFC Asset Management Company that is listed, is Reliance Nippon Life Asset Management.
|Parameters||HDFC AMC||Reliance Nippon AMC|
|Price Earning Ratio||44||26|
|Net Profit Margin||41||33|
|Return on Assets||30.43||20.22|
In the above table, comparison is done by profitability ratio, liquidity ratio and valuation ratio.
Shares vs Mutual Funds
If you have no knowledge of the equity market, but are looking to gain from it, mutual funds are ideal for you.
Investments can be made in mutual funds since they provide a wide array of funds, for investors with various risk appetite and investment durations.
Also, the amount of investment can vary as per the investor’s preference.
Equity-oriented mutual funds invest in shares of companies from different sectors.
In a mutual fund, a skilled and trained professional handles all investments for you and therefore, you can benefit from the equity market without spending too much time figuring out the intricacies
Following are the different funds
1.Large Cap Funds
Here the investment is made in large cap companies. These companies offer 12-18% return. Moderate risk is involved and it is suggested to invest here for 4 years or more.
2.Mid Cap Funds
Here the investment is made in mid cap companies. These companies offer 15-20% return. Moderately high risk is involved and it is suggested to invest here for 5 years or more.
3.Small Cap Funds
Here the investment is made in small cap companies. These companies offer 15-20% return. High risk is involved and it is suggested to invest here for 6 years or more.
4. Balanced Fund
This fund is a combination of equity and debt.
Yes, it’s possible.
Depending on the proportion of investment made in equity and debt, the risk and returns are accordingly determined. It is suggested to invest here for 2 to 3 years. Returns in these funds range from 11-14%.
Investments can be made via lump sum investment or through SIP (Systematic Investment Plan) mode in any of these funds.
Moreover, returns are something that cannot be promised, but these return estimates have been given on the basis of past performance.
Mutual Funds for 2018
Large Cap Fund:
These funds invest in large companies that have a history of good performance and stable balance.
Mid Cap Fund:
These are high risk – high return funds. They are a bit riskier than large-cap funds.
Small Cap Fund:
These are funds that you can invest in if you want very high growth. Subsequently, they have a higher risk grade as well.
Disclaimer: The views expressed in this post are that of the author and not those of Groww