HDFC Corporate Debt Opportunities Fund

The HDFC Corporate Debt Opportunities Fund is an income scheme focussing on generation of recurring income as well as capital appreciation through investments primarily in corporate debt.

Type of fund

This is an open ended income mutual fund.

Investment objective

The objective here is to generate regular income and capital appreciation through corporate debt-based investments.

Fund information

Inception date 25/03/2014
CRISIL rank Ranked 4th in Credit Opportunities Fund
Schemes
  • Direct Option – Half Yearly Dividend Option
  • Direct Growth – Normal Dividend Option
  • Direct Option – Growth Option
  • Regular Option – Half Yearly Dividend Option
  • Regular Option – Normal Dividend Option
  • Regular Option – Growth Option
Entry load 0%. Any upfront commissions to be paid by investor directly to ARN holder.
Exit load
  • 2% if redeemed within 12 months
  • 1% if redeemed between 12-24 months
  • 0.50% if redeemed within 24-36 months
  • Nil if redeemed after 36 months
Minimum investment Rs.5,000 for new investors and any amount thereafter
SIP No minimum amount
Product label – Risk and target investors Moderate risk. Meant for investors looking to generate income over the medium to long term through corporate debt based investments.
Benchmark CRISIL Short Term Bond Fund Index. This index aims to track performance of a debt portfolio consisting of AAA/AA rated corporate bonds, government securities, Certificates of Deposit and Commercial Papers.
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 10 days. Minimum redemption amount of Rs.1,000 or 100 units.
Taxation (on investment and on redemption) As per applicable sections under the Income Tax Act.

Fund manager(s)

Mr Shobhit Mehrotra is the Senior Fund Manager and Head of Credit and comes with over 18 years of experience in fixed income markets, credit ratings etc. He has an MBA from Clemson University, USA and has previously worked with Templeton AMC and ICRA. He manages other funds from HDFC AMC including HDFC Medium Term Opportunities Fund, HDFC Liquid Direct Plan, HDFC High Interest Short Term Direct Plan and HDFC Fixed Maturity Plan, among others.

Mr Rakesh Vyas has overall 8 years of past experience with 5 years in the field of equity research and 3 years as an application engineer. He handles several 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 and others. He has a B.E. Electrical degree and a PGDM from XLRI Jamshedpur. His past experiences have been in Lehman Brothers and Nomura.

Investment philosophy

The fund will invest the net assets in money market instruments and corporate debt opportunities with a wide range of maturities and yields to make the most out of various interest rate scenarios. With corporate debt instruments generally trading above government securities, the scheme plans to take advantage of the spread over government securities. 80-100% of the investments will be in corporate debt opportunities while 0-20% of net assets may be invested in money market instruments.

Portfolio – Sector / Top 10 holdings*

Name Sector Class Allocation (%)
Adani Power Ltd 2018 Engineering SO 3.16
8.36% Power Finance Corp. Ltd Financial Bonds 2.66
Tata Sky Ltd 2020 Services ZCB 2.42
10.81% Writers and Publishers Pvt Ltd 2018 FMCG SO 2.36
11.2% Aditya Birla Retail Ltd 2017 Financial Debenture 2.15
8.56% Rural Electrification Corp Ltd Financial Bonds 1.90
ITD Cementation Ltd Construction CP 1.84
12.65% Prism Cement Ltd 2017 Construction Debenture 1.77
Infiniti Retail Ltd 2017 Consumer Durable Debenture 1.74
12.5% Spirit Textiles Pvt Ltd 2019 Textiles Debenture 1.73

*As on 31st July 2015

Risk measures

Standard Deviation NA
Sharpe Ratio NA
Alpha NA
Beta NA

Performance*

AUM Rs.6373 crores (Regular Growth)
NAV
  • Direct Option – Half Yearly Dividend Option: Rs.10.6720
  • Direct Growth – Normal Dividend Option: Rs.10.3207
  • Direct Option – Growth Option: Rs.11.7740
  • Regular Option – Half Yearly Dividend Option: Rs.10.6272
  • Regular Option – Normal Dividend Option: Rs.10.7189
  • Regular Option – Growth Option: Rs.11.6414
Expense Ratio
  • 1.75%
  • Direct plans have a lower expense ratio by 1.10%

*As on 31st July 2015

Benchmark comparison*

Compounded Annualised Returns
Scheme Returns (%)
Benchmark Returns (%)
  Growth Option Direct Plan – Growth Option Growth Option Direct Plan – Growth Option
Returns for last 1 year 11.78 12.60 10.18 10.18
Returns since inception 11.86 12.65 10.14 10.14
 

*As on 30th April 2015

Expert view of the fund

The HDFC Corporate Debt Opportunities Fund invests almost exclusively in corporate debt in securities rated AA or below. The idea behind this is to maximize returns if the securities gain a lot of steam in the near future. The portfolio consists predominantly of securities of maturities less than 5 years with the mean maturity lying around 2-3 years. Interest rate risks are mitigated as the scheme will actively take credit risks. The fund is meant for active investors looking at higher than average returns from debt instruments. You should always consult with your personal financial advisor before making any investments in mutual fund schemes.

How to apply

Investors can apply for the HDFC Corporate Debt Opportunities Fund scheme via online and offline methods.

  • Online

    Investors can use the HDFCMFOnline web portal to register for their applications. The portal is accessible to all customers having a folio with the company. On satisfying the KYC norms, investors can fill the requisite forms and submit them online. Alternatively, investors may also use third party providers for the application purpose if it is available. However, you should be sure about the credentials of those providers before making any promises.

  • Offline

    Offline customers can approach any of the Investor Service Centres of HDFC MF and fill the relevant forms and submit supporting documents to proceed with the application process. Alternatively, they may also use third party distributors or dealers for applying to this scheme, however they should make sure the distributor is genuine.

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