Srinivasan says multi asset solutions like the HDFC Asset Allocator FoF have two primary objectives: (1) to offer inflation beating returns over the long term and (2) to reduce the impact of market volatility such that investors feel comfortable to take out money whenever they need -rather than when markets permit.
HDFC Asset Allocator being a FoF offers investors a suite of all the highly rated fund managers of the fund house across equity and debt funds, in a single model driven asset allocation solution. HDFC AMC is unique in its breadth of diverse fund management talent who straddle multiple asset classes and styles. This is in a sense, the best of HDFC AMC in a single product.
Allocations into different funds follow a core and satellite approach which ensures adequate diversification at a portfolio level while remaining agile to capitalize on thematic or other opportunities.
The fund has consistently delivered on the twin mandates Srinivasan articulated – in terms of delivering healthy double digit returns and managing volatility better than most peers.
While the fund has stayed ahead of peer group average on 3 yr performance, near term performance suffered in part due to a sizeable drop in mid and small cap funds allocation within the FoF on heightened valuation concerns – which didn’t work in its favour as mid and small caps continued rallying strongly over the last 12 months.
Srinivasan says he has fine-tuned the allocation template to separate out midcaps from small caps and view each independently for valuation comfort – a move that provides more dynamism to allocation decisions.