HDFC Short Term Debt Fund

The HDFC Short Term Debt Fund is a debt open-ended scheme aligned with the Macaulay Duration of the portfolio between one and three years. The fund’s primary aim is to generate income and capital appreciation through asset allocation in debt and money market instruments. The overall moderate risk profile of the fund is ideal for investors with a matching outlook for achieving the fund objectives by staying invested for at least one year to reap optimal benefits.

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The HDFC Short Term Debt Fund focuses on building a higher quality credit portfolio through interest accruals in the invested debt and money market instruments like standing. The investment pattern in the fund is geared to achieve the objectives as the asset allocation is up to 100% low to moderate risk profile debt, including securitized debt and money market instruments. Only about 10% asset allocation may be made in moderate to high-risk profile units issued by REITI and InvITs. The actual portfolio asset allocation achieved in juxtaposition with the projected strategy is 97.39% in debt and 2.61% in others.

In the light of the above revelation, the top ten holdings in the fund are distributed with a cumulative percentage to the NAV of 50.11% as of 31 March 2021. Some of the notable names are REC Ltd. (8.58%, Reliance Industries (6.65%), SBI (6.60%), NABARD (5.51%), HDFC (5.23%), GOI (4.25%), LIC (4.18%), Vedanta Ltd. (3.29%), Invinfravit Trust (3.09%), and MTNL (2.72%).  

In terms of sector, the portfolio asset allocation is concentrated in Financial Services, Power, Construction, and Oil and Gas, comprising nearly 80% of the NAV.  

The investor can choose from the following plans and its options offered by the HDFC Short Term Debt Fund:

HDFC Short Term Debt Fund Regular

  • Growth Option
  • IDCW Option

HDFC Short Term Debt Fund Direct

  • Growth Option
  • IDCW Option

**Investors in the direct option have to buy the units from the Fund House directly and not through the distributors.

**IDCW is an acronym for Income Distribution Capital Withdrawal and has two other versions in Normal and Fortnightly implying payout and reinvestment. The Fortnightly option is executed on the 10th and 25th of every month.

**The default option is Growth if no option is explicitly indicated.

** Fortnightly IDCW is the default option if none is specified.

Fund Facts

 Parameters

Particulars

Fund Name

HDFC Short Term Debt Fund (Regular and Direct)

Fund House

HDFC Asset Management Company of HDFC Mutual Fund

Launch Date

25 June 2010

Scheme Category

Short Duration Fund

Scheme Type

Open-ended debt scheme

AUM

Rs 17442.84 crore as of 30 April 2021

Benchmark

CRISIL - Short-Term Bond Fund Index

Application Investment

Minimum: Rs 5000

Additional: Any amount in multiples of Rs 1000 after that.

Lock-In

Nil

Entry Load

Nil

Exit Load

Nil. In the case of SIP, the applicable load, if any, prevailing the registration date.

Return Performance

Above Average

Fund Consistency

Average

Risk Level

Moderate

Benefits of HDFC Short Term Debt Fund

The HDFC Short Term Debt Fund provides the investor with a host of benefits to ensure that a regular steady is forthcoming in short-term horizons, satisfying individual needs as an alternative to bank deposits. Let us check out some of the critical benefits listed below:

Fund Integrity

HDFC AMC is one of the foremost Fund Houses in the Indian Mutual Fund market. A combination of the brand and the investment objective in the HDFC Short Term Debt Fund ensures that the investor receives a consistent return.  A diversified portfolio with the support of debt and money market instruments ensures regular fixed income through interest accruals.

Ease of Investment

The open-ended HDFC Short Term Debt Fund is conveniently bought and sold in units at the prevailing NAV. It is unnecessary to invest in the Mutual Fund in lump-sum, but the alternative SIP is convenient for attracting small investors. The investor does not find investing in the fund daunting, especially for the simple reason that there are several convenient variations in the SIP mode.

Liquidity

The HDFC Short Term Debt Fund is an open-ended scheme that essentially means that the investor can purchase fund units, switch-in, redeem, and switch-out on every business day based on NAV prices. Fund redemption proceeds per SEBI rules must be paid within a maximum of 10 business days from the requested date. Failure to pay the proceeds within the stipulated time, a penal interest of 15% PA is payable by the Fund House. It is another matter that the proceeds are usually paid within 3 to 4 days.

Taxation

Earnings in the redemption of Mutual Funds are considered for Income Tax under the extant laws. The two application forms are:

Capital Gains

The gains accrued from the HDFC Short Term Debt Fund units sale three years from the purchase date is taxed at 20% of the gains post inflation indexation. If sold within three years, the gain is added to the investor’s income tax liability at the applicable tax slab. No tax is levied as long as the portfolio stays invested.

Dividend

Earning is added to the investor’s income for computing income tax liability at the applicable slab rate.

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

Fund Summary

HDFC Short Term Debt Fund Regular Plan-Growth Option

  • Risk Level: Moderate
  • NAV: Rs 24.852 as of 21 May 2021
  • Expense Ratio: 0.76 as of 30 April 2021
  • Fund Started On: 26 May 2009

HDFC Short Term Debt Fund Direct Plan-Growth Option

  • Risk Level: Moderate
  • NAV: Rs 25.25 as of 20 May 2021
  • Expense Ratio: 0.24 as of 30 April 2021
  • Fund Started On: 1 January 2013

Fund Returns Summary

HDFC Short Term Debt Fund Regular Plan-Growth Option (as of 31 March 2021)

Period

Return %

Benchmark Returns %

1 year

8.51

7.80

3 years

8.58

8.38

5 years

8.26

8.08

Since Inception

8.70

8.28

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

HDFC Short Term Debt Fund Direct Plan-Growth Option (as of 31 March 2021)

Period

Return %

Benchmark Returns %

1 year

8.99

7.80

3 years

8.85

8.38

5 years

8.49

8.08

Since Inception

8.79

8.49

Cumulative Pros and Cons Table

Pros

Cons

The Expense Ratio is lower at 0.24

The exit load is applied to the SIP investment at the prevailing rate.

The envisaged Macaulay Duration is not always achieved.

Returns for one year are higher than the category average returns.

Returns for three-year are higher than the category average returns.

Returns for five-year are higher than the category average returns.

The exit load is nil.

Fund House Details

HDFC Asset Management Company, commonly called the HDFC Mutual Fund, is a subsidiary of HDFC Limited, offering varied financial services. It was launched in 1999 as a joint venture enterprise between HDFC Limited and Standard Life Investment PLC of the UK. The company was converted through the IPO route in August 2018, with a public holding a 26.1% stake.

HDFC AMC is a premier Mutual Fund House dominating the scene with an AUM of Rs 4.1 trillion held in over 9.1 million accounts of a vast customer base comprising retail and institutional investors. They are the market leaders in Equity Oriented Mutual Fund Schemes supported by over 224 branches across India and a strong network of distributors and channel partners, including banks.

The primary stakeholders of the HDFC AMC are:

  1. HDFC Limited: It is a financial conglomerate providing financial services ranging from housing, banking, life, non-life insurance, real estate, and education. Its shareholding in the HDFC AMC is 52.8%.
  2. Standard Life Investments Limited: The UK based Standard Life Aberdeen Group is one of the largest asset managers in Europe operating through its subsidiary in India.  Its global presence is spread across 40 locations, including the Middle East, America, other parts of Asia, and Australia. Its   stake in the HDFC AMC is 26.9%

Who Should Invest in HDFC Short Term Debt Fund?

The primary objective of the HDFC Short Term Debt Fund is to generate income and capital appreciation on its investments with Macaulay Duration of a maximum of three years. The fund is categorized with a risk profile as moderate with investments primarily in debt and money market instruments. Investors who are not risk-averse, and at the same time, wary of market volatility have a clear interest in investing in the fund. The individuals and others who can invest in the HDFC Short Term Debt Fund are:

  • Resident individuals
  • Minors with the natural guardian like father and mother or the legal guardian.
  • The HUF Karta.
  • Partnership firms of every hue.
  • Corporate Houses, Bodies of People, Registered Associations and Societies.
  • Financial institutions.
  • Public Sector Enterprises.
  • Entities sponsored by the armed and paramilitary forces.
  • Research organizations.
  • Other Mutual Fund schemes.

The above list is only indicative. The investor must compulsorily consult the HDFC Short Term Debt Fund’s SID brochure for clarity.

Conclusion 

The HDFC Short Term Debt Fund provides moderate profile risk investors with the scope to earn a regular income alternative to bank deposits. Investment in the fund is backed by one of the most profitable Fund Houses with an impressive track record of delivering consistent returns in the short-term horizons. It is convenient to purchase and redeem units to address liquidity concerns in the open-ended scheme. Though the Fund House endeavours to achieve the fund objective, no return is guaranteed although the possibility of suffering losses is low.

FAQs

  • Q. Are transaction charges recovered from the investor for purchasingHDFC Short Term Debt Fund units?

    The first time Mutual fund investors have to pay Rs 150 per purchase or subscription of Rs 1,00,00 or more, which is recovered from the paid amount. The units are allotted on the balance amount. The charge in the case of the existing investor is Rs 100 while the other conditions remain the same.  

  • Q. Who are the designated fund managers for theHDFC Short Term Debt Fund scheme?

    Mr Anil Bamboli has been managing the fund since 25 June 2010. He has over 26 years of experience in Fund Management, and Research, and Fixed Income dealing. He was joined recently by Mr Sankalp Baid on 22 January 2021 to manage Overseas Investments primarily.

  • Q. What is the NAV of theHDFC Short Term Debt Fund, and how is it calculated?

    The NAV or the Net Asset Value denotes the per-unit price of the Mutual Fund. It is computed by reckoning the current holding value at the day-end, subtracting the applicable expenses, and dividing the result by the number of units of the fund issued to date. All the fund activities like purchase, switch, and redemption is based on the NAV on any business day, which is also the calculation frequency. The current NAV of the HDFC Short Term Debt Fund is Rs 25.25 as of 20 May 2021.

  • Q. How much is the Expense Ratio in theHDFC Short Term Debt Fund?

    The Fund House recovers annual charges levied for managing the investor’s funds. It is called the Expense Ratio and is denoted by a percentage of the AUM based on the returns generated by the fund. The current Expense Ratio as of 30 April 2021 for the Regular Plan is 0.76%, and the Direct Plan is 0.24%.

  • Q. When can theHDFC Short Term Debt Fund unit be redeemed?

    The investor can redeem the units in whole or partially every Business Day based on the applicable NAV for the day. The Fund House must pay the redemption proceeds within ten Business Days from the application date.

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

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

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

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

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