HDFC Mid Cap Opportunities Fund

HDFC Mid Cap Opportunities Fundan open-ended equity mutual fund scheme, has a minimum exposure of 65% to mid-cap stocks and seeks to invest in other equity and equity-related securities to achieve the fund objective. The Fund's investment objective is to provide long-term wealth creation by investing predominantly in mid-cap companies. Also, the Fund holds a portfolio of mid-cap companies with promising growth prospects, robust financial strength, sustainable business models, and attractive pricing that offers scope for value creation.

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The Fund has 100% investment in Indian stocks, of which 71.87% is in mid-cap stocks, 14.84% in small-cap stocks, and 13.29% in large-cap stocks. The fund objective is to create alpha through top-quality mid-stock selection.

A significant portion of the stock portfolio comprises BKT Industries Ltd., Aarti Industries, Supreme Industries, Persistent Systems, AIA Industries, Cholamandalam Investment & Finance Ltd., etc.

HDFC Mid Cap Fund is available in 4 categories:

  • Direct - Growth
  • Direct - IDCW
  • Regular - Growth
  • Regular - IDCW

Direct plans are plans in which investors acquire mutual fund units directly from the Fund House. Regular plans are plans in which investors purchase mutual fund units using the distributor network. 

IDCW denotes Income Distribution cum Capital Withdrawal (Payout and Reinvestment Facility) Plan. The Scheme offers only annual frequency with reinvestment and payout transfer facilities subject to sufficiency of distributable surplus as per extant SEBI guidelines.

Table: Investment Facts

Parameter

Details

Fund Name

HDFC Mid Cap Fund (Regular & Direct)

Fund House

HDFC Mutual Fund

Launch Date

25-Jun-2007

Benchmark

NIFTY Midcap 100 TRI

Type

Open-Ended

Minimum Investment

Rs. 5,000/-

Minimum Additional Investment: Rs.1,000/-

Minimum SIP Investment: Rs.500/-

Minimum SWP Investment: Rs.500/-

Lock-in Period

None

Entry Load

Not applicable

Exit Load

 1% to be charged for redemption within 365 days;

 No Exit Load after 365 days.

Return Performance

Average

Fund Consistency

Below Average

Risk Level

Average

Investment Objective

HDFC Mid Cap Fund aims to achieve long-term wealth creation. The Fund's investment objective is to generate long-term capital growth by investment in prominent mid-cap companies. The fund objective is to generate alpha through judicious mid-cap stock selection. Also, the Fund holds a portfolio of mid-cap companies which have promising growth prospects, robust financial strength, sustainable business models, and attractive pricing that offers scope for value creation.

The Fund provides a continuous offer for Units at NAV-based prices. It has offered high returns, although it is a little over two years old. Although permitted under regulations, the Scheme has not invested any portion of its Fund in debt and money market securities. However, investment in debt securities will be guided by liquidity, interest rates, credit quality, and general economic outlook.

As an open-ended scheme, investors are allowed to purchase the fund units at NAV-based prices on all working days. It has provided benchmark beating returns to investors over the past ten years.

The Fund operates under the directives of HDFC Asset Management Company. The Fund House has constantly aimed to provide the investor with an opportunity to gainfully invest in the capital markets without worrying about the vagaries of the markets.

Fund Summary

HDFC Mid Cap Fund Direct Plan-Growth

  • Risk level-Average
  • NAV-Rs. 84.908 as of 25.05.2021
  • Expense Ratio-1.08%
  • Fund Started-01.01.2013

HDFC Mid Cap Fund Direct Plan IDCW

  • Risk level-Average
  • NAV-Rs. 42.743 as of 25.05.2021
  • Expense Ratio-1.08%
  • Fund Started-01.01.2013

HDFC Mid Cap Fund Regular Plan-Growth

  • Risk level-Average
  • NAV-Rs. 79.289 as of 25.05.2021
  • Expense Ratio-1.79 %
  • Fund Started-25.06.2007

HDFC Mid Cap Fund Regular Plan IDCW

  • Risk level-Average
  • NAV-Rs. 32.693 as of 25.05.2021
  • Expense Ratio-1.79 %
  • Fund Started-25.06.2007

Fund Manager(s)

  • Chirag Setalvad (Since June 25, 2007)
  • Mr Sankalp Baid (Since January 22, 2021)

Fund Returns Summary

HDFC Mid Cap Fund Direct Plan Growth-Returns Summary

Time Period

Returns Per Year (Annualized)

6 Months

31.63%

1 year

91.54%

2 years

21.35%

3 years

12.70%

5 years

17.07%

Since Inception

19.66%

HDFC Mid Cap Fund Direct Plan IDCW- Returns Summary

Time Period

Returns Per Year(Annualized)

6 Months

31.66%

1 year

91.57%

2 years

20.78%

3 years

12.00%

5 years

16.51%

Since Inception

20.36%

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

HDFC Mid Cap Fund Regular Plan Growth-Returns Summary

Time Period

Returns Per Year(Annualized)

6 Months

31.18%

1 year

90.23%

2 years

20.54%

3 years

11.82%

5 years

16.05%

10-years

17.86%

Since Inception

16.03%

HDFC Mid Cap Fund Regular Plan IDCW- Returns Summary

Time Period

Returns Per Year(Annualized)

6 Months

29.26%

1 year

90.87%

2 years

19.96%

3 years

11.44%

5 years

15.64%

10-years

17.34%

Since Inception

15.68%

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Summative Pros and Cons Table

Pros

Cons

The Regular plan of the Fund has earned absolute returns of 16.05%/ 16.78%/ 17.86% over 5/7/10 year periods, which are healthy.

The Fund has underperformed its benchmark, Nifty Midcap 100 TRI, over the 3/5/7 years.

Mid cap funds have the potential to outperform large cap funds over the long term.

Mid cap funds may potentially underperform small cap funds over the long term.

 

With an AUM over Rs.26,900 crore, the Fund is large in size, and the scope for healthy returns from mid-cap companies in the medium to long term is a challenge.

Benefits of HDFC Mid Cap Fund

Investment in HDFC Mid Cap Fund provides several benefits to the investors over the long term.

  • Proven Track Record: HDFC Mutual Fund is one of India’s largest and most profitable mutual fund houses, with more than Rs.4 lakh crore in assets under management. Started in 1999, it has a proven track record of over 20 years. It provides a complete suite of savings and investment products across asset classes. The Fund's schemes have withstood multiple business cycles and have established track records of over 2 decades. 
  • Diversification: HDFC Mid Cap Fundbuilds a mid-cap company portfolio across varying industries and sectors that offer an acceptable risk-reward balance. The portfolio comprises investments in various sectors, such as financial services, chemicals, engineering, automobile, healthcare, consumer durables, FMCG, technology, etc.
  • Equity Asset Class Benefit:HDFC Mid Cap Fund is an Equity Fund. Equity as an asset class has a time-tested track record of beating inflation and performing better than the traditional asset classes of gold and debt.
  • Wealth Creation Tool: The Fund is a beneficial investment option for long-term wealth creation. Mid-cap funds have given higher returns in the past over the long term, in comparison to large-cap funds. At the same time, mid-cap funds are less risky in comparison to small-cap funds. Being a mid-cap fund, one should not invest in HDFC Mid Cap Fundfor less than five years. A SIP would be an ideal method of investing in this Fund.

Fund House Details

HDFC Mid Cap Fund is housed under the Fund House, HDFC Mutual Fund, which is set up as a Trust, as per the provisions of the Indian Trusts Act, 1882 under a Trust Deed. The Fund's Trustee is HDFC Trustee Company Limited, which is also the exclusive owner of the Fund. HDFC Asset Management Company Limited (“the AMC”) was registered with SEBI to act as the Investment Manager to all the Schemes of HDFC Mutual Fund. 

The Fund House is sponsored by Housing Development Finance Corporation Limited (HDFC) and Standard Life Investments Limited, which own 52.7% and 21.2% stake, respectively. The Fund's products provide income and wealth creation opportunities to its extensive retail and institutional customer base of over 91 lakh accounts. The Fund's customers are catered to by distributors spread over 200 cities with a network of 224 branches and 1,163 employees. Each Scheme is managed by fund managers, who in turn report to Mr. Prashant Jain as the Chief Investment Officer.

The promoter shareholders of the Fund House are:

  • HDFC Ltd:52.7% holdings

HDFC Ltd., incorporated in 1977 as a specialized mortgage finance company, is now a financial conglomerate having a prime position in housing finance, banking, life, and non-life insurance, asset management, real estate funds, and education finance. HDFC Ltd is India’s largest housing finance company with total assets of Rs.5,676 billion on March 31, 2021, and profit after tax of Rs.120.27 billion for the year ended March 31, 2021. 

  • Standard Life Investments Limited: 21.2% holdings

Standard Life Investments Limited is a subsidiary of Standard Life Aberdeen plc group, one of the world’s largest investment companies. It came into existence in 2017 by the merger of Aberdeen Asset Management Plc. and Standard Life Plc. Standard Life Investments Limited manages more than US$650bn of assets under the brand Aberdeen Standard Investments. It is, therefore, the largest active manager in the UK and also in Europe. It has 24 investment centers worldwide and provides investment and asset management services to customers. 

Who should invest in HDFC Mid Cap Fund?

HDFC Mid Cap Opportunities Fund seeks to earn long-term gains from its investments in mid-cap companies. The Fund will fit the bill for investors who seek the following:

Aggressive Investment Strategy: Although the Fund falls in the average risk category, it would be prone to volatility in NAV in the medium term. Hence, investors who prefer an Aggressive equity investment style may only opt for this type of Fund. Mid-cap companies are known to be the large-cap companies of the future. Hence, it is beneficial to 'catch them young.

Long-term value creation: The Fund is a mid-cap fund formed to generate long-term capital growth by investing in mid-cap companies with promising growth prospects, robust financial strength, sustainable business models, and attractive pricing that offers scope for value creation. With this objective, the Fund invests in a diversified portfolio consisting of equity & equity-related instruments of mid-sized companies. Equity funds are suited for long-term wealth creation and hence it is imperative to invest for more than 5 years. Unsure investors may seek expert opinion from a financial adviser before investing in HDFC Mid Cap Fund to judge its suitability to their financial goals.

Conclusion

HDFC Mid Cap Fund is a mid-cap fund. When one invests for five years or more, one may expect to beat the inflation rate comfortably. Compared to large-cap funds, the NAV of mid-cap funds tends to fall more when stock prices fall in the market since mid-cap funds invest in mid-sized companies. While one may expect higher returns in the long term, there will be a lot of volatility along the way.

FAQs 

  • Q. Should I invest in HDFC Mid Cap Fund for my daughter’s wedding?

    While investing in a mid-cap equity mutual fund, one should expect to take at least 5 years for the investment to generate healthy returns. Mid Cap Funds would deliver market-beating returns only in the long term and underperform in the short to medium term. Further, in the event of an economic downturn, mid-cap companies get more adversely affected than large-cap companies and generally take longer to recover. Hence, if one’s daughter’s wedding is a long-term investment goal, one may think of investing in funds such as HDFC Mid Cap Fund. 

  • Q. What is the taxation for HDFC Mid Cap Fund investors?

    The capital gains earned from selling HDFC Mid Cap Fund units are taxed depending on how long the investor held the investment. If the investments are sold within 1 year of holding, the gains are classified as short-term capital gain, and one needs to pay 15% tax on the gains. On the other hand, if investments are held for more than one year, the gains are classified as a long-term capital gains. It may be noted that in a financial year, long-term capital gains of up to Rs.1 lakh are exempt from tax. Beyond Rs.1 lakh, these gains are taxed at a flat rate of 10%.

  • Q. What is the definition of large-cap, mid-cap, and small-cap?

    The market capitalization of a listed company is calculated by multiplying its current market price by the number of its shares outstanding. The listed equity space of "Large Cap", "Mid Cap", and "Small Cap" companies comprise those defined by SEBI from time to time. At present, they are defined as:

    • Large Cap: 1st -100th company by market capitalization. 
    • Mid Cap: 101st -250th company by market capitalization. 
    • Small-Cap: 251st company onwards by market capitalization.
  • Q. How much is HDFC Mid Cap Fund allowed to invest in equity, debt, REITs/ InvITs, and preference shares?

    As per its mandate, HDFC Mid Cap Fund is allowed to invest in the following instruments:

    Type of Instruments

    Minimum Allocation

    Maximum Allocation

    Equity

    65%

    100%

    Debt

    0%

    35%

    REITs/ InvITs

    0%

    10%

    Non-convertible Preference Shares

    0%

    10%

  • Q. Should I invest a lump sum amount in HDFC Mid Cap Fund?

    Some people believe that investing a lump sum amount in equity doesn't matter when one is investing for a very long period, viz. 15 years. However, psychology plays an equal role, if not more, as financial acumen in equity financing. Mid-cap companies are prone to volatility in prices, and the fall in prices witnessed is higher than large-cap companies. At times, the investor would have to bear a great deal of discomfort in watching the value of his lump-sum investment shaved off. For these reasons, an investor should opt for the systematic investment plan (SIP) option to average out the cost of investing over a long period of time.

Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.

“The investment risk in investment portfolio is borne by the policyholder.”

 “Tax benefit is subject to changes in tax laws. Standard T&C apply.”

Disclaimer: Current Portfolio Allocation is based on the prevailing market conditions and is subject to changes depending on the fund manager’s view of the equity markets.

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