HDFC Flexi Cap loads up on banks, exits a market giant

Summary: HDFC Flexi Cap isn’t just doubling down on banks. Its July portfolio reveals a few other large-cap additions, and even a bold bet on a new-age company. Want the full list? Register and read for free.

One of India’s largest flexi-cap funds, HDFC Flexi Cap, made a striking move in July, a complete exit from Reliance Industries. The fund sold all its 10 lakh shares of India’s most valuable company, according to its latest portfolio disclosures.

This is no small fund making routine tweaks. HDFC Flexi Cap is the second-largest flexi-cap fund in India after Parag Parikh Flexi Cap, and one of the most closely tracked active equity funds in the country.

About HDFC Flexi Cap Fund

The fund has become one of the largest active equity funds in the country, thanks to its stellar long-term track record. Over the last five years, its average daily five-year rolling return has been 17.7 per cent, comfortably ahead of its benchmark, the Nifty 500 TRI, which clocked 16 per cent.

What does that mean in simple terms? Rolling returns show how a fund performs across every possible investment period, not just at fixed points like three years or five years. For example, if you invested in HDFC Flexi Cap on August 1, 2018, and held it till August  1, 2023, that’s one five-year return. Do the same for August 2, 2018, to August 2, 2023, and so on, for each day across the last five years. In total, you get 1,827 such five-year return points.

Here’s the remarkable part: not once did HDFC Flexi Cap deliver a negative five-year return during this period. In every case, investors walked away with gains. Few funds can boast of such consistency.

It’s this performance that makes the fund, launched in 1995 and currently co-managed by Roshi Jain and Dhruv Muchhal, a five-star rated scheme on Value Research.

Big bets in July: Banking and beyond

The portfolio changes in July show where the managers are now placing their confidence. The fund doubled down on banks, quite literally in the case of HDFC Bank, where its shareholding jumped from 3.6 crore to 7.2 crore shares in a single month. The fund has now invested about 9 per cent of its investors’ money in this bank.

Other significant additions in the banking space included Kotak Mahindra Bank and SBI, with comparatively smaller top-ups in ICICI Bank and Bank of Baroda.

Outside the banking space, the most eye-catching buy was Swiggy, where the fund raised its share count by nearly 60 per cent in July. Other notable buys included Cipla, Hindalco Industries, Infosys, ONGC, Cyient and Varroc Engineering.

Trimming and exits

On the sell side, the fund partially pared holdings in Apollo Hospitals and Ramco Cements. The headline move, however, was the complete exit from Reliance Industries, a counter that has long been a staple in many large-cap portfolios.

The takeaway

The exit from Reliance will certainly raise eyebrows, but the aggressive tilt towards banking, coupled with fresh bets on consumer tech like Swiggy, suggests that the fund managers are positioning for a different leadership in the next phase of the market.

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