The HDFC Mid-Cap Direct Fund is an open-ended equity scheme focusing on long-term capital appreciation through a total asset allocation in Mid-Cap company stocks.
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The fund managers aim to create a diversified portfolio picking mid-cap stocks that show reasonable growth prospects through sustainable business models, sound financial strength, and valuation, offering potential capital appreciation.
The HDFC Mid-Cap Direct Fund plan is suited for investors who are not averse to high-risk equity investments for higher yields in long time horizons, knowing the impact of market volatility. Although wealth creation is the primary aim of the investor, it is implied that the minimum tenure for staying invested should be three years and above.
By choosing to invest in the HDFC Mid-Cap Fund Direct plan, the investor has ensured that the returns are higher than the Regular plan due to the lower expense ratio. A glance through the top holdings in the portfolio is an indicator of the strategy adopted by the Fund Manager to achieve the Fund’s objectives.
Some of the top holdings in the portfolio expressed in the percentage to the NAV as of 31st May 2021 are Cholamandalam Investment and Finance (5.86), Balkrishna Industries Ltd. (5.76), Aarti Industries Ltd. (4.39), Sundaram Fasteners Ltd. (3.89), Max Financial Services Ltd. (3.16), to name a few. The top three equity holdings in the percentage of net assets as of 31 May 2021, showing industry allocation, are Auto Ancillaries (15.12), Finance (11.47), and Chemicals (10.82).
The plan options on offer for the HDFC Mid-Cap Direct Fund are:
The sharable profits in the Fund are reinvested.
It is an acronym for Income Distribution and Capital Withdrawal, which essentially provides the option for reinvestment and payout of shareable profits as dividends.
The table below shows some parameters that one should know in regards to the HDFC Mid-Cap Direct Fund:
Parameters |
Particulars |
Fund Name |
HDFC Mid-Cap Direct Fund is available in Growth and IDCW Plans. |
Fund House |
HDFC Asset Management Company, commonly known as HDFC Mutual Fund |
Launch Date |
25 June 2007 |
Scheme Category |
Mid-Cap Fund |
Scheme Type |
Open-ended equity scheme |
AUM |
Rs 28671.84 crore as of 31 May 2021 |
Benchmark |
Nifty Midcap 100 (TRI) |
Application Investment |
Minimum: Rs 5000 Additional: Any amount in multiples of Rs 1000 after that |
Lock-In |
Nil |
Entry Load |
Zero |
Exit Load |
1% for units redeemed/switched with one year of purchase Nil for units redeemed/switched after one year of purchase |
Risk Grade |
Average |
Return Grade |
Average |
Risk Level |
High Risk |
The HDFC Mid-Cap Direct Fund predominantly restricts its investments to Mid-Cap companies with the potential to deliver sustained higher returns in the long term. Since the yields are dependent on the market fluctuations, the Fund is classified as high-risk. Naturally, investors choosing the HDFC Mid-Cap Direct Fund are willing to bear the risk to earn higher returns in the long time horizons, ideally exceeding three to four years.
However, investors can look forward to the benefits of the Fund as a decisive factor to invest. Let us check out some of the critical benefits.
The investor has the flexibility to start with a minimum application amount of Rs 5000. Additional amounts are paid in multiples of Rs 1000. The SIP facility is convenient, with the frequency extending from daily to quarterly, starting from Rs 300. To top it all, the investor can purchase the HDFC Mid-Cap Direct Fund units at the distributor’s office or multiple intermediaries.
As per SEBI stipulations, the AMC must compute the NAV daily at the close of business and disclose the value in their portal along with AMFIs. The deadline for uploading the NAV in the stated public domain is 11 Pm on the business day. Additionally, the AMC transmits the NAV on SMS against specific requests.
The HDFC Mid-Cap Direct Fund is an open-ended scheme, meaning it can be freely redeemed or switched on the investor’s express request. The SEBI mandates the dispatch of the proceeds within ten business days, making the Fund fully liquid. However, SEBI has also stipulated 15% interest per annum for the delayed period by the AMC.
The profit earned from the HDFC Mid-Cap Direct Fund is covered by the extant tax laws. Earning on redemption is considered Capital Gains and Dividends as income.
Note: “Tax benefit is subject to changes in tax laws. Standard T&C apply.”
Take a look below to understand the fund summary:
The table below shows the HDFC Mid-Cap Direct Fund-Growth Plan Option (as of 31 March 2021):
Period |
Return % |
Benchmark Returns % |
1 year |
89.44 |
103.91 |
3 years |
10.66 |
9.09 |
5 years |
16.16 |
14.34 |
Since Inception |
18.92 |
14.35 |
Returns greater than one year are compounded annualized (CAGR).
Returns since inception are calculated on Rs 18.799 allotment price
Benchmark is NIFTY Midcap 100 (TRI)
The table below highlights the pros and cons of HDFC Mid-Cap Direct Fund briefly:
Pros |
Cons |
The Expense Ratio at 1.08% is lower than the regular plan
The exit load is nil for redemption after one year |
The Asset Under Management (AUM) at over Rs 28000 crore slows down returns after a particular sum |
The HDFC Mid-Cap Fund Direct plan’s profile is high-risk as its investments are all in Mid-Cap equity and equity-related instruments, as the name suggests. Such being the case, the investors aligned with a similar profile is ideally placed to purchase units in the scheme for wealth creation in the long term horizon.
However, it is only staying invested for more than three years that can provide the desired yields after absorbing inflationary erosion to fulfill the financial goals. Accordingly, the indicative list of investors who should invest in the scheme is described below:
The HDFC Midcap Direct Fund eminently suits investors with a high-risk profile for its predominant investment in Mid-Cap stocks for a long-term capital appreciation. Liquidity is ensured by the Fund’s open-ended nature providing ready redemption and switch facility every business day.
The investor can compute the redemption value using the applicable day’s NAV disclosed in compliance with SEBI guidelines. In fine, the scheme can create wealth in the long time horizon to help achieve life’s financial goals.
*All savings are provided by the insurer as per the IRDAI approved insurance
plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
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†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.