HDFC Medium Term Opportunities Fund

4 Value Research
Change from previous, NAV as on Oct 30, 2014
Category: Debt: Income
Assets: R 2,125 crore (As on Sep 30, 2014)
Expense: 0.29% (As on Mar 31, 2014)
Investment Objective

The scheme seeks to generate regular income through investments in Debt/Money Market Instruments and Government Securities with maturities not exceeding 60 months.

Fund Managers
+ Shobhit Mehrotra since Jun 2010
As on Dec 18, 2013

The fund has performed better than most of its peers since 2010 though it has a short history of around 3 years. It offers the advantage of being a low cost fund to its investors.

The investment objective of the scheme is to generate regular income through investments in debt/money market instruments and government securities with maturities not exceeding 60 months. The scheme seeks to generate income through investments in a range of debt and money market instruments of various credit ratings (above investment grade) with a view to maximising income while maintaining an optimum balance of yield, safety and liquidity.

The fund's average maturity has never crossed 5 years and hovered in the range of 0.02 to 3.63 years. It has been in the intermediate range in terms of average maturity. The fund's expenses has not crossed 0.27 per cent which is among the lowest in the category where the median expense is 1.50 per cent (as on March 31, 2013).

It has outperformed the category average since 2010 and its year to date return of 6.08 per cent is also better than the category average of 5.07 per cent. It has been part of the top two quartile since its inception.

When it comes to the portfolio, the fund has mostly invested in bonds, debentures and certificate of deposits since its launch while the government security has been low. Initially, its holdings in certificate of deposits was higher but in the past one year bond as well as debenture exposure has gone up. Currently, it is over 60 per cents in bonds and debentures.

Why invest?
This fund is rate cycle agnostic by staying medium term irrespective of the interest rate cycle. It has performed well since its launch but it is still early days. Its fund management has stayed the same since inception.