{"id":1299,"date":"2019-11-22T00:00:12","date_gmt":"2019-11-22T00:00:12","guid":{"rendered":"https:\/\/blog.certifiedfinancialguardian.com\/?p=1299"},"modified":"2019-11-26T05:09:21","modified_gmt":"2019-11-26T05:09:21","slug":"hdfc-mid-cap-opportunities-fund-pulling-through-tough-times","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2019\/11\/22\/hdfc-mid-cap-opportunities-fund-pulling-through-tough-times\/","title":{"rendered":"HDFC Mid-Cap Opportunities Fund: Pulling Through Tough Times"},"content":{"rendered":"\n

Mid-caps have been under pressure in the last 2 years, while many midcap stocks still continue to be beaten down as a result of the persistent slowdown in the economy. Nevertheless, the valuations in the midcap segment seem to be more attractive compared to their large cap counterparts.<\/p>\n\n\n\n

With more reform measures and announcements by the government to revive the market sentiment and boost economic growth, stocks of many mid-sized companies may turn out to be beneficiaries and may rise in the years to come. By picking and sticking to quality mid cap names, mutual fund managers can be in a position to reward investors with better risk-adjusted returns when the tide turns in the favour of this segment.<\/p>\n\n\n\n

HDFC Mid-cap Opportunities Fund (HMOF)<\/a> is one such mid cap fund which predominantly invests in mid-sized companies having reasonable growth potential at acceptable valuations.<\/p>\n\n\n\n

The fund was launched in June 2007 and has the largest corpus in the mid cap fund category. It is managed by Mr Chirag Setalvad (since inception) who has close to 20 years of experience in fund management and equity research. Mr Chirag Dagli is the dedicated fund manager for overseas investment since July 2019.<\/p>\n\n\n\n

Graph 1:\u00a0Growth of Rs 10,000 if invested in HDFC Mid-cap Opportunities Fund 5 years ago<\/em><\/strong><\/p>\n\n\n\n

\"Graph<\/figure><\/div>\n\n\n\n

\u00a0Data as on November 19, 2019
(Source: ACE MF)<\/p>\n\n\n\n

HMOF has performed reasonably well despite the sharp volatility witnessed in the mid cap segment over the last couple of years. Had you invested Rs 10,000 five years back on November 19, 2014 in HMOF it would now be worth Rs 16,022 (as calculated on November 19, 2019)<\/em>. This translates into a compounded annualised growth rate of 9.89%. In comparison, a simultaneous investment of Rs 10,000 in its benchmark Nifty Midcap 100 – TRI would have grown to Rs 14,614 (a CAGR of 7.88%). The fund has generated moderate lead over the benchmark in the last five years.<\/p>\n\n\n\n

Graph 2:\u00a0HDFC Mid-cap Opportunities Fund\u2019s year-on-year performance<\/em><\/strong><\/p>\n\n\n\n

\"Graph<\/figure><\/div>\n\n\n\n

 *YTD as on November 19, 2019
(Source: ACE MF)<\/p>\n\n\n\n

Launched in June 2007, HMOF has a track record of over 12 years to its credit. Its year-on-year performance comparison relative to its benchmark Nifty Midcap 100 – TRI shows that the fund outpaced the index in 6 out of last 10 calendar years. Its outperformance in most years was in the range of 11 to 18 percentage points. The funds ability to restrict the downside risk has been impressive. In the on-going correction phase which began in January 2018, the fund has outdone the benchmark with a noticeable margin.<\/p>\n\n\n\n

Table 1: HDFC Mid-cap Opportunities Fund’s performance vis-a-vis category peers<\/em><\/strong><\/p>\n\n\n\n

\n
\n\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t
Scheme Name<\/strong><\/td>\n\t\t\tCorpus (Cr.)<\/strong><\/td>\n\t\t\t1 Year (%)<\/strong><\/td>\n\t\t\t2 Year (%)<\/strong><\/td>\n\t\t\t3 Year (%)<\/strong><\/td>\n\t\t\t5 Year (%)<\/strong><\/td>\n\t\t\tStd Dev<\/strong><\/td>\n\t\t\tSharpe<\/strong><\/td>\n\t\t<\/tr>\n\t\t
Axis Midcap Fund<\/a><\/td>\n\t\t\t3,551<\/td>\n\t\t\t5.60<\/td>\n\t\t\t13.97<\/td>\n\t\t\t14.45<\/td>\n\t\t\t17.28<\/td>\n\t\t\t14.15<\/td>\n\t\t\t0.16<\/td>\n\t\t<\/tr>\n\t\t
L&T Midcap Fund<\/a><\/td>\n\t\t\t5,831<\/td>\n\t\t\t-7.85<\/td>\n\t\t\t3.78<\/td>\n\t\t\t13.17<\/td>\n\t\t\t19.12<\/td>\n\t\t\t16.00<\/td>\n\t\t\t0.04<\/td>\n\t\t<\/tr>\n\t\t
Sahara Midcap Fund<\/a><\/td>\n\t\t\t8<\/td>\n\t\t\t-3.76<\/td>\n\t\t\t2.66<\/td>\n\t\t\t12.68<\/td>\n\t\t\t14.77<\/td>\n\t\t\t16.29<\/td>\n\t\t\t0.03<\/td>\n\t\t<\/tr>\n\t\t
Invesco India Midcap Fund<\/a><\/td>\n\t\t\t621<\/td>\n\t\t\t-0.92<\/td>\n\t\t\t8.15<\/td>\n\t\t\t12.62<\/td>\n\t\t\t17.72<\/td>\n\t\t\t15.84<\/td>\n\t\t\t0.07<\/td>\n\t\t<\/tr>\n\t\t
Kotak Emerging Equity Fund<\/a><\/td>\n\t\t\t5,341<\/td>\n\t\t\t-3.22<\/td>\n\t\t\t4.72<\/td>\n\t\t\t12.00<\/td>\n\t\t\t19.74<\/td>\n\t\t\t15.79<\/td>\n\t\t\t0.03<\/td>\n\t\t<\/tr>\n\t\t
DSP Midcap Fund<\/a><\/td>\n\t\t\t6,691<\/td>\n\t\t\t-2.76<\/td>\n\t\t\t4.38<\/td>\n\t\t\t11.96<\/td>\n\t\t\t17.55<\/td>\n\t\t\t15.63<\/td>\n\t\t\t0.03<\/td>\n\t\t<\/tr>\n\t\t
Taurus Discovery (Midcap) Fund<\/a><\/td>\n\t\t\t51<\/td>\n\t\t\t-6.67<\/td>\n\t\t\t4.81<\/td>\n\t\t\t11.24<\/td>\n\t\t\t15.46<\/td>\n\t\t\t16.38<\/td>\n\t\t\t0.03<\/td>\n\t\t<\/tr>\n\t\t
Nippon India Growth Fund<\/a><\/td>\n\t\t\t6,632<\/td>\n\t\t\t-2.16<\/td>\n\t\t\t5.26<\/td>\n\t\t\t11.10<\/td>\n\t\t\t14.09<\/td>\n\t\t\t15.62<\/td>\n\t\t\t0.02<\/td>\n\t\t<\/tr>\n\t\t
HDFC Mid-Cap Opportunities Fund<\/a><\/td>\n\t\t\t22,637<\/td>\n\t\t\t-6.35<\/td>\n\t\t\t3.43<\/td>\n\t\t\t11.08<\/td>\n\t\t\t16.81<\/td>\n\t\t\t15.80<\/td>\n\t\t\t-0.01<\/td>\n\t\t<\/tr>\n\t\t
ICICI Pru Midcap Fund<\/a><\/td>\n\t\t\t1,847<\/td>\n\t\t\t-5.43<\/td>\n\t\t\t4.23<\/td>\n\t\t\t10.88<\/td>\n\t\t\t15.87<\/td>\n\t\t\t15.23<\/td>\n\t\t\t0.01<\/td>\n\t\t<\/tr>\n\t\t
Franklin India Prima Fund<\/a><\/td>\n\t\t\t7,510<\/td>\n\t\t\t-2.85<\/td>\n\t\t\t4.98<\/td>\n\t\t\t10.83<\/td>\n\t\t\t17.58<\/td>\n\t\t\t14.30<\/td>\n\t\t\t0.02<\/td>\n\t\t<\/tr>\n\t\t
Tata Mid Cap Growth Fund<\/a><\/td>\n\t\t\t747<\/td>\n\t\t\t-0.17<\/td>\n\t\t\t5.57<\/td>\n\t\t\t10.65<\/td>\n\t\t\t16.81<\/td>\n\t\t\t17.46<\/td>\n\t\t\t0.05<\/td>\n\t\t<\/tr>\n\t\t
Edelweiss Mid Cap Fund<\/a><\/td>\n\t\t\t945<\/td>\n\t\t\t-7.73<\/td>\n\t\t\t5.13<\/td>\n\t\t\t10.50<\/td>\n\t\t\t17.46<\/td>\n\t\t\t16.77<\/td>\n\t\t\t0.03<\/td>\n\t\t<\/tr>\n\t\t
Sundaram Mid Cap Fund<\/a><\/td>\n\t\t\t5,883<\/td>\n\t\t\t-9.51<\/td>\n\t\t\t0.18<\/td>\n\t\t\t8.38<\/td>\n\t\t\t16.08<\/td>\n\t\t\t16.29<\/td>\n\t\t\t-0.05<\/td>\n\t\t<\/tr>\n\t\t
BNP Paribas Mid Cap Fund<\/a><\/td>\n\t\t\t757<\/td>\n\t\t\t-6.07<\/td>\n\t\t\t1.69<\/td>\n\t\t\t8.15<\/td>\n\t\t\t15.33<\/td>\n\t\t\t16.60<\/td>\n\t\t\t0.00<\/td>\n\t\t<\/tr>\n\t\t
Baroda Mid-cap Fund<\/a><\/td>\n\t\t\t47<\/td>\n\t\t\t-8.56<\/td>\n\t\t\t2.33<\/td>\n\t\t\t7.85<\/td>\n\t\t\t4.15<\/td>\n\t\t\t15.95<\/td>\n\t\t\t-0.03<\/td>\n\t\t<\/tr>\n\t\t
Aditya Birla SL Midcap Fund<\/a><\/td>\n\t\t\t2,356<\/td>\n\t\t\t-9.82<\/td>\n\t\t\t-0.15<\/td>\n\t\t\t7.81<\/td>\n\t\t\t15.05<\/td>\n\t\t\t16.50<\/td>\n\t\t\t-0.06<\/td>\n\t\t<\/tr>\n\t\t
Motilal Oswal Midcap 30 Fund<\/a><\/td>\n\t\t\t1,625<\/td>\n\t\t\t-3.44<\/td>\n\t\t\t1.58<\/td>\n\t\t\t7.00<\/td>\n\t\t\t15.06<\/td>\n\t\t\t16.88<\/td>\n\t\t\t-0.01<\/td>\n\t\t<\/tr>\n\t\t
UTI Mid Cap Fund<\/a><\/td>\n\t\t\t3,745<\/td>\n\t\t\t-9.56<\/td>\n\t\t\t1.07<\/td>\n\t\t\t6.67<\/td>\n\t\t\t14.90<\/td>\n\t\t\t16.92<\/td>\n\t\t\t-0.04<\/td>\n\t\t<\/tr>\n\t\t
Quant Mid Cap Fund<\/a><\/td>\n\t\t\t11<\/td>\n\t\t\t-3.85<\/td>\n\t\t\t5.52<\/td>\n\t\t\t6.49<\/td>\n\t\t\t8.81<\/td>\n\t\t\t13.50<\/td>\n\t\t\t0.01<\/td>\n\t\t<\/tr>\n\t\t
Nifty Midcap 100 – TRI<\/td>\n\t\t\t<\/td>\n\t\t\t-10.11<\/td>\n\t\t\t0.42<\/td>\n\t\t\t8.68<\/td>\n\t\t\t13.52<\/td>\n\t\t\t18.66<\/td>\n\t\t\t-0.03<\/td>\n\t\t<\/tr>\n\t<\/tbody>\n<\/table>\n<\/div>\n<\/center>\n\n\n\n

Returns are on a rolling basis and in %, calculated using Direct Plan – Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on November 19, 2019
(Source: ACE MF) <\/p>\n\n\n\n

Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.<\/strong><\/p>\n\n\n\n

HMOF performed better than the benchmark across rolling periods. However, it lagged the category average in each of the rolling period, though with a lower margin.<\/p>\n\n\n\n

The fund stood behind the top performers in the mid cap category such as Axis Midcap Fund<\/a>, L&T Midcap Fund<\/a>, Sahara Midcap Fund<\/a>, Invesco India Midcap Fund<\/a> and so on but managed to stay ahead of many other peers.<\/p>\n\n\n\n

In terms of risk-return profile, HMOF registered volatility nearly in line with the category average though lower as compared to the benchmark. While it managed to deliver better risk-adjusted returns as compared to the benchmark, the average category risk-adjusted returns were higher.<\/p>\n\n\n\n

Investment strategy of HDFC Mid-Cap Opportunities Fund<\/strong><\/p>\n\n\n\n

HMOF predominantly invests in equities of mid cap companies with a minimum exposure of 65% of its assets. It also seeks to participate in other equity and equity related securities to achieve optimal portfolio construction. Given the higher volatility of mid caps, the fund lays strong emphasis on risk management.<\/p>\n\n\n\n

The fund aims to build a portfolio of mid cap companies which have:<\/p>\n\n\n\n