|
|
|
The dilemma of selection Have you ever found yourself staring at supermarket shelves trying to figure out what to select from seemingly endless variants of similar products? While being spoilt for choice or not having dearth of options can be liberating, it can also leave us more confused and indecisive. Similarly, choosing between different investments avenues can also be a real conundrum for investors, especially for those who are conservative and less financially savvy. To escape this dilemma of selection, investors at times end up going for more conventional products or worse still; maintain a status quo by parking funds in a savings account. The onus on investors to select right investment avenues has increased further with availability of various types of mutual funds, catering to various risk return profiles. Conservative investors who have traditionally opted for savings account deposits, term deposits and public provident fund (PPF) now have relatively more viable alternatives in the form of hybrid funds which invest in a mix of asset classes to strike the right balance between risk and returns. A unique MF solution One unique offering in the mutual funds space is in the form of Equity Savings Funds, which aim to provide attractive returns by investing in equity, debt and arbitrage opportunities. HDFC Equity Savings Fund, our offering in this category invests between 15%-40% in equities, 10%-35% in debt and 25%-75% in derivatives. This mix of asset classes aims at providing investors an appropriate risk-return balance in a tax efficient manner.
From a risk return perspective, equity savings funds are a notch below balanced funds and a notch above debt funds. HDFC Equity Savings Fund provides better stability and downside protection than pure equity/balanced funds. Although capital appreciation potential of the fund is lower than pure equity fund, it scores over equity funds and balanced funds in terms of lower market risk and it is more tax efficient than pure debt funds.
Tax efficient, volatility busting inflation fighter It is a well known fact that equity prices fluctuate according to various factors or in other words equity returns are more volatile as compared to conventional investment options like FD’s, Post office deposits etc. This skepticism about volatility of returns deters conservative investors from opting for equity mutual funds. HDFC Equity Savings Fund provides multiple advantages here by having a conservative equity exposure (15%-40%) and at the same time enjoys taxation benefits of equity funds due to additional exposure to equities through arbitrage opportunities making total equity exposure greater than 65%. Further, debt portfolio of 10%-35% cushions the portfolio from volatility of equity markets. With 3 asset classes to choose from, fund manager can rebalance the portfolio based on market conditions and outlook.
Nimbleness of HDFC Equity Savings Fund, with a potential to give investors the best of both worlds viz. capital appreciation potential of equities and stable returns of debt investments, makes this fund stand out from rest of conventional choices like bank deposits, post office deposits etc. In a world where one encounters multitude of similar options to choose from, an option which stands out and ticks multiple boxes makes decision making easier. HDFC Equity Savings Fund does exactly this in the world of investment for conservative investors.
DISCLAIMER: The views are expressed by Mr. Ashok Kanawala, Vice President, Products and Business Development, HDFC Asset Management Company Limited (HDFC AMC), as on 26th February. The views are based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations, meant as guidelines only, which you must confirm before relying on them. The information given is for general purposes only. Past performance may or may not be sustained in future. The statements are given in summary form and do not purport to be complete. The views / information provided do not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this information. The information/ data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy. The statements contained herein are based on our current views and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. HDFC Mutual Fund/AMC is not guaranteeing any returns on investments made in the Scheme. The data/statistics are given to explain general market trends in the securities market; it should not be construed as any research report/research recommendation. Neither HDFC AMC and HDFC Mutual Fund nor any person connected with them, accepts any liability arising from the use of this document. The recipient(s) before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein. The information given herein is as per the prevailing tax laws. For Further details on taxation, please refer to the Section on 'Taxation on investing in Mutual Funds' in 'Statement of Additional Information ('SAI'). Investors should be aware that the fiscal rules/ tax laws may change and there can be no guarantee that the current tax position may continue indefinitely. MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. Share this article |
AMC Speak
