HDFC Inflation Indexed Bond Fund

The HDFC Inflation Indexed Bond Fund is aimed at generating income as well as capital appreciation that is indexed to inflation. The fund is offered by HDFC Mutual Funds, among the largest mutual fund houses in the country.

Type of fund

This is an open ended income mutual fund.

Investment objective

The objective here is to generate income and capital appreciation that is indexed to inflation by making investments in a portfolio consisting of inflation indexed bonds.

Fund information

Inception date

04/03/2013

CRISIL rank

Not ranked

Schemes

  1. Direct Dividend
  2. Direct Growth
  3. Direct Quarterly Dividend
  4. Regular Dividend
  5. Regular Growth
  6. Regular Quarterly Dividend

Entry load

0%. Any upfront commissions to be paid by investor directly to ARN holder.

Exit load

1.50% if redeemed within 1 year

Minimum investment

  1. Rs.5,000 for new investors and any amount thereafter
  2. Rs1,000 for existing investors and any amount thereafter

SIP

  1. Minimum Rs.500 for monthly subscription (Monthly SIP). Rs,100 multiples thereafter
  2. Min. Rs.1,500 for quarterly subscription (Quarterly SIP). Rs.500 multiple thereafter

Product label - Risk and target investors

Moderate risk. Meant for investors who wish to hedge against inflation and generate income through investments in inflation indexed securities issued by govt. and corporates.

Benchmark

I-SEC Composite Gilt Index.

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. 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 Anil Bamboli is a CFA qualified professional from AIMR, USA. He has a Master's degree in Management Studies in Finance and graduation in Cost and Works Accountant from ICWAI. He was previously employed by SBI Fund management. He manages other funds from HDFC AMC such as HDFC Short term Direct Plan, HDFC Multiple Yield Fund Plan, HDFC Cash Mgmt. Savings and HDFC Gilt Short Term Plan, among others.

Investment philosophy

The fund will invest primarily in inflation linked bonds or IIBs while pursuing a balance between returns and liquidity. The fund aims to use investment strategies such as relative curve positioning, duration management, spread and similar tactics. 70-100% of the portfolio will include investments in money market instruments and/or money market schemes/units of liquid of HDFC Mutual Fund. 0-30% of portfolio may consist of other debt and money market instruments.

Risk measures

Standard Deviation

3.84%

Sharpe Ratio

-0.43

Alpha

NA

Beta

NA

Performance*

AUM

Rs.1 crore (Regular Growth)

NAV

  1. Direct Dividend: Rs.10.00
  2. Direct Growth: Rs.11.2978
  3. Direct Quarterly Dividend: Rs.10.2725
  4. Regular Dividend: Rs.10.3427
  5. Regular Growth: Rs.11.1442

Expense Ratio

  1. 1.27%

*As on 31st July 2015

Benchmark comparison*

Compounded Annualised Returns

Scheme Returns (%)

Scheme Returns (%)

Benchmark Returns (%)

Benchmark Returns (%)

Scheme Returns (%)

Benchmark Returns (%)

Growth Option

Direct Plan - Growth Option

Growth Option

Direct Plan - Growth Option

Returns for last 1 year

3.18

3.53

14.81

14.81

Returns since inception

3.64

4.22

9.17

9.17

*As on 30th April 2015

Expert view of the fund

Inflation indexed bonds are fairly new entrants in the Indian mutual fund investments market. These schemes help provide hedge against inflation. The bonds offer capital appreciation if the interest rates continue rising, Right now the sentiment of the apex bank is toward cutting interest rates, so short term profits aren't likely. However, in the long run if interest rates go up, the returns will be higher than tax free bonds at little to no risk. Mutual fund investments are subject to market risk and you should consult with your personal financial advisor before making any investments in these instruments.

How to apply

Investors can go for either online application or offline application routes for applying to HDFC Inflation Indexed Bond Fund.

  1. OnlineCustomers can log into the HDFCMFOnline portal if their have an existing folio, email ID and HPIN. In case the HPIN number has not been provided yet, you can generate it online by following a few steps. Online applicants can also use third party websites for the application process. However, you should always check the credentials of such providers before making any investments through them.
  2. OfflineYou can get the application form at any Investor Service Centre of HDFC MF and submit the filled-in application form as well as supporting documents after satisfying the KYC norms. The process is simple and you can also download forms online to submit at respective centres. Alternatively, third party distributors can also help you with the registration process, though these should be chosen only after extensive background check from your end.
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