A report by Morningstar India suggests that the fund house is at the bottom of the inflow chart so far in FY 2021-22. Several HDFC schemes have received the lowest exposure in their respective categories.
HDFC AMC saw a net outflow of around Rs 1,049 crore for the quarter ended September 2021. Two funds – HDFC Liquid Fund and HDFC Low Duration Fund – saw a cumulative net outflow of a little over Rs 12,000 crore during the same period.
Large institutions usually opt to park their surplus funds in these loan schemes for a short period of time. Any large net outflow from these funds could put pressure on the net inflows of the category and AMCs. On the equity side, popular schemes like HDFC Mid-Cap Opportunities, HDFC Top 100, HDFC Small Cap and HDFC Flexi Cap have been the lowest grossers in their respective categories.
It is also important to note that funds like HDFC Short Term (Rs 1,128 crore), HDFC Corporate Bond (Rs 1,175 crore), HDFC Overnight Fund (Rs 4,294 crore) and HDFC Credit Risk Debt (Rs 664 crore) were some of the funds where Net inflows during the quarter were the highest in their respective category. Experts believe that the reasons for the poor performance of the price style InvestmentMany investors have turned away from HDFC schemes.
“Withdrawals during the quarter are mainly from HDFC Flexicap- Rs 1,379 cr, HDFC Midcap Opportunities- Rs 734 cr and HDFC Large Cap – Rs 666 cr. HDFC funds are operated with a consistent price bias. Post 2018 Since then, growth stocks have outperformed value stocks, but value stocks have made a comeback over the past year,” said Melvin Santrita, Research Analyst – Manager Research, Morningstar. Investment Consultant India.
“Given their value investing style, these funds underperformed their peers when the growth style was on the side, but bounced back in the past 1 year as the value surfaced. Such market cycles are par for the course. Investors should be aware of this fund manager style and look at the performance in the market cycle, not to redeem funds on short term underperformance,” said Santritha.
Many advisors are also of the view that even though HDFC funds have a strong return track record, these schemes have a tendency to undergo poor performance over a long period of time. If you look at the risk-ratings of these schemes, many popular equity funds of HDFC AMC carry higher risk as compared to the respective category. However, advisors also say that for long-term investors, who understand the investment strategy of the fund house, HDFC schemes are a good bet.
“In general, HDFC funds have a higher concentration of outperforming. They can outperform their peers and group in the long run, and then close the gap in the short run. The performance of HDFC FlexiCap is an example – it is down half when it comes to 3-y and 5-y performance, but has performed well in 1-Y comparisons,” said Srinivasan, founder, Shree Investments, a Chennai-based financial planning firm .
“Obviously, the subpar performance in the last few years would have contributed to investor sentiment and hence outflows,” Srinivasan said.