The HDFC Core and Satellite Fund is a diversified growth fund that aims to exploit the lower prices of stocks of companies as compared to their actual values. It is offered by HDFC AMC, among the largest mutual fund houses in India.
Type of fund
This is an open ended diversified equity-oriented growth mutual fund.
Investment objective
The objective here is to generate long term capital appreciation through investments in the equities of companies whose shares are selling at lower prices than their actual values.
Fund information
| Inception date | 17/09/2004 |
| CRISIL rank | Rank 5 in Diversified Equities |
| Schemes | •Direct Plan – Growth Option •Direct Plan – Dividend Option •Growth Plan •Dividend Plan |
| Entry load | 0%. Any upfront commissions to be paid by investor directly to ARN holder. |
| Exit load | 1% if redeemed within 1 year |
| Minimum investment | •Rs.5,000 for new investors and any amount thereafter •Rs1,000 for existing investors and any amount thereafter |
| SIP | •Minimum Rs.500 for monthly subscription •Min. Rs.1,500 for quarterly subscription |
| Product label – Risk and target investors | Moderately High risk. Meant for long term investors aiming for long term capital gain through diversified equity based investments in companies that have undervalued stock prices. |
| Benchmark | S&P BSE 200. The need for BSE 200 was necessitated after the explosive growth in number of stocks listed on the BSE Sensex by 1994. This index includes 200 companies that reflect high volumes of turnover and other fundamental factors that help the index represent the overall flow in equity markets. |
| SWP | Yes. Available in Fixed and Variable variants. Frequency of withdrawals are monthly, quarterly half yearly and yearly for Fixed SWP and quarterly, half yearly and yearly for Variable SWP. |
| STP | Yes. Available in two variants namely Fixed Systematic Transfer Plan (FSTP) and Capital Appreciation Systematic Transfer Plan (CASTP). Daily, Weekly, Monthly and quarterly transfer plans are available. |
| Redemption | Proceeds to be dispatched within 3-4 days |
| Taxation (on investment and on redemption) | As per applicable sections under the Income Tax Act. |
Fund manager(s)
Mr Rakesh Vyas has 8 years of previous experience including 5 years in the field of equity research and 3 years as an application engineer. He also handles others funds for HDFC Mutual Funds including HDFC Balanced Fund, HDFC Multiple Yield Fund Plan 2005, HDFC Mid Cap Opportunities Fund and HDFC Short Term Opportunities Fund etc. He has a B.E. Electrical degree and a PGDM from XLRI Jamshedpur. His past experiences have been in Lehman Brothers and Nomura.
Mr Vinay R Kulkarni has more than 22 years of previous experience including 20 years in the fund management and equity research sector and 2 years in the IT sector. He has a B.Tech from IIT Mumbai and PGDM from IIT Bangalore. His past experiences have been in Tata AMC, UTI Mutual Fund, Deutsche Mutual Fund and Patni Computer Systems Ltd. He manages other funds from HDFC AMC including HDFC Multiple Yield Plan, HDFC Taxsaver, HDFC Dual Advantage Fund, HDFC Premier Multi Cap Fund and HDFC Large Cap Fund, among others.
Investment philosophy
The fund will invest in equities and equity related instruments of two groups of companies called as ‘core’ group and ‘satellite’ group. The core group includes strong large cap companies while the satellite group consists of small and mid cap companies, which carry some risk but also offer potentially higher returns. The satellite group of companies are aimed to complement the core group. Core companies include fundamentally strong companies valued lower than their intrinsic value while satellite companies include hot small and mid cap companies with great possibilities as well as lower than deserved valuations.
Portfolio – Sector / Top 10 holdings*
| Name | Sector | Class | Allocation (%) |
| Infosys Ltd | Tech | Equity | 8.81 |
| Tata Motors DVR | Auto | Equity | 8.31 |
| Larsen & Toubro Ltd | Diversified | Equity | 7.53 |
| Grasim Industries Ltd | Diversified | Equity | 6.97 |
| KEC International Ltd | Engineering | Equity | 5.77 |
| Titagarh Wagons Ltd | FMCG | Equity | 4.82 |
| Maruti Suzuki India Ltd | Auto | Equity | 4.28 |
| ICICI Bank Ltd | Financial | Equity | 4.19 |
| VRL Logistics Ltd | Services | Equity | 3.73 |
| State Bank of India | Financial | Equity | 3.57 |
*As on 31st July 2015
Risk measures
| Standard Deviation | 20.98% |
| Sharpe Ratio | 0.65 |
| Alpha | 3.32% |
| Beta | 1.25 |
Performance*
| AUM | Rs.303 crores (Growth) |
| NAV | •Direct Plan – Dividend Option: Rs.19.0800 •Direct Plan – Growth option: Rs.56.1000 •Dividend Plan: Rs.18.7010 •Growth Plan: Rs.55.2790 |
| Expense Ratio | •2.50% on first Rs.100 crores daily net assets •2.25% on next Rs.300 crores •2.00% on next Rs.300 crores •1.75% on remaining daily net assets Direct plans have a lower expense ratio by 0.65% |
*As on 31st July 2015
Benchmark comparison*
| Compounded Annualised Returns | Scheme Returns (%) | Benchmark Returns (%) |
| Returns for last 1 year | 13.53 | 8.15 |
| Returns for last 3 years | 14.08 | 7.17 |
| Returns for last 5 years | 11.27 | 10.98 |
| Returns since inception | 23.92 | 19.94 |
*As on 31st March 2011
Expert view of the fund
The HDFC Core and Satellite Fund has comfortably beaten the benchmark returns and performed above average in its category of mutual funds. The fund has been handled by Vinay Kulkarni for almost 10 years now and the portfolio is generally made up of large cap companies accounting for half of the investments while the remaining investments are in small and mid cap companies. The fund is ideal for wealth creation and complementing lifestyle requirements. You should always consult with your personal financial advisor before investing in any risky instruments such as mutual funds.
How to apply
You can choose to apply for the HDFC Core and Satellite Fund via online or offline measures.
- Online
- Offline
You can use the HDFCMFOnline portal to apply online for this fund. The portal can be accessed from the website and will ask you to satisfy KYC norms before further processing. Once this has been completed, you will receive a HPIN number to make applications and do transactions for your selected funds. Alternatively, you may use the services of third party online distributors after careful consideration.
You can approach any branch of HDFC that accepts MF registrations and fill out requisite forms and supporting documents to start the application process. Once you have done the paperwork, you can start building your portfolio. Alternatively some third party distributors also offer mutual fund application services, however it is advisable to only go for those distributors after comprehensive background checks.
