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The Housing Development and Finance Corporation, HDFC has grown over the years to expand its operations in banking, insurance, and asset management sector. HDFC Mutual Fund has launched HDFC Prudence Fund to balance the risk of equity investments with the dependable performance offered by the debt instrument. HDFC Mutual Fund manages a number of mutual funds ranging from equity to liquid funds and provides portfolio management services to investors.
Among its many products, the HDFC Prudence Fund is one of the leading aggressive hybrid mutual funds in the country. Hybrid mutual funds are also known as balanced funds or balanced mutual funds. They are a unique range of funds that help to balance risk and potential growth of equity instruments with a steady performance offered by debt instruments. In case of HDFC prudence Fund, this scheme has been merged with HDFC Balanced Advantage Fund and the investments made are diversified from large-cap equity instruments to the extremely safe government securities. These provide regular income, growth, and a minimum level of risk. HDFC Hybrid Funds are an excellent diversification tool for an investment portfolio as they provide a unique balance of return and risk to the investor.
Historically, HDFC Prudence Fund has outperformed its benchmarks. However, in recent times the fund is underperforming mainly due to subdued recovery in the growth of corporate loan and rising NPA, as it has primarily bet on corporate banks.
|Fund / benchmark||1 year||3 year||5 year||10 year|
|HDFC Prudence Fund||2%||9%||12%||14%|
|CISIL Hybrid fund 35-65||9%||10%||12%||NA|
Following are the leading key equity and equity-related investments of HDFC Prudence Fund:
|Investment sector||Top holdings|
|Financial||State Bank of India, ICICI Bank, Bank of Baroda, Canara Bank, etc.|
|Technology||Tata Consultancy Limited, Infosys, etc.|
|Diversified||Larsen & Toubro, Apar Industries, etc.|
|Energy||Reliance Industries, Power Grid Corp, NTPC, Cairn India, etc.|
|Chemicals||Aarti Industries, Sharda Cropchem, etc.|
|Automobile||Tata Motors, Maruti Suzuki India, etc.|
|Miscellaneous||Tata Steel, BEML, Aurobindo Pharma, Prism Cement, etc.|
Following is the list of debt and debt-related investments made by HDFC Prudence Fund:
|Debt instrument type||Top holdings|
|Bonds||State Bank of India 8.75%, Canara Bank 8.6%, Union Bank of India, IDBI Bank, Union Bank of India, Syndicate bank, etc.|
|Government of India securities||8.13% GOI, 7.88% GOI 2030, 7.59% GOI 2026, 6.97% GOI 2026, etc.|
|Central Government Loan||8.17% GOI 2044, 8.32% GOI 2032, 8.24% GOI 2033, 8.24% GOI 2027, 8.6% GOI 2028, 8.33% GOI 2036, etc|
|Bonds & Debentures||8.75% Axis Bank 2017, 7.95% HDFC 2026, etc.|
|Debentures||11.5% Bank of India 2050, 9.95% Syndicate Bank, 11.09% IDBI Bank 2050, etc.|
|Non-convertible Debentures||11.5% Bank of India, etc.|
The HDFC Prudence Fund is one of the most suitable investment options for investors who seek to receive periodic income from their mutual fund investment, while also receiving the capital appreciation over a long period of time. Moreover, one of the key objectives of HDFC Prudence Fund is to prevent capital loss in the long run, which often occurs in case of equity investment when the markets have a bull run. The fund invests in a range of equity and equity-related instruments and also maintains a balance through investment in a different type of debt and debt-related investment options.
The below-listed are some of the key eligibility criteria to invest in HDFC Prudence Fund.
Below is the list of the documents needed to apply for HDFC Prudent Fund
How is HDFC Balanced Fund?
HDFC Balanced Fund aims to generate income and capital growth in the long run through investment in a dynamic combination of equity and debt investments. The fund has the mandate to reduce its equity exposure up to 30% based on the market conditions. Currently, the fund has a 43% equity investment, and the rest is in debt investment.
Should I invest in HDFC Prudence Fund?
The fund has a very high-risk component, and therefore, the volatility of the fund is on the higher side. The HDFC Prudence Fund is not suitable for conservative investors. Despite the recent downfall in its performance and risk component, the fund remains the top pick among many investors. Investors with moderate to high-risk capacity may consider HDFC Prudence Fund for long term financial objectives.
What is HDFC Prudence Fund dividend?
HDFC Prudence Fund Dividend option allows investors to receive dividend payouts on their mutual fund investments whenever the fund declares a dividend payout. In the case of dividend option, the investor can either opt for dividend payout or dividend reinvest. In case of reinvesting option, the investor is allotted additional mutual fund units equal to the value of the dividend earned.
What is HDFC Prudence Fund?
HDFC Prudence Fund is an aggressive hybrid fund. This scheme has been merged with HDFC Balanced Advantage Fund. The fund dynamically manages its portfolio between equity and debt investment to balance between the risk-return ratio of the investment.
What is the new name of HDFC Prudence Fund?
The new name of HDFC Prudence Fund is HDFC Balanced Advantage Fund.