HDFC Credit Risk Debt Fund Regular Option Normal Payout Inc Dist cum Cap Wdrl Opt INF179KA1I87

This is achieved through a well-structured and research-driven process that combines macroeconomic assessment with bottom-up credit selection. The investment team begins by forming a macro-outlook, which guides portfolio positioning through calibrated credit and duration strategies.

In credit selection, the team places emphasis on the quality of management, promoter group strength, and corporate governance standards. This qualitative assessment is complemented by rigorous quantitative analysis, including leverage, coverage, and solvency ratios. The process also benefits from the insights of the in-house equity research team, particularly in evaluating issuers with listed equity. For lower-rated credits, the team maintains a shorter review cycle and ensures that the financial strength of issuers is validated by major external rating agencies before investment.

Duration positioning is guided by macro factors such as yield-curve trends, liquidity conditions, and interest rate outlook. A dedicated and experienced risk-management function is closely integrated into the process, ensuring consistent oversight and adherence to internal credit limits. The fund continues to execute this framework effectively, maintaining a balanced mix of high-quality and higher-yielding bonds, which has contributed to superior risk-adjusted returns over the medium term.

An in-depth understanding of issuers and sector dynamics has helped Shobhit Mehrotra identify securities offering attractive spreads within controlled risk parameters. The fund’s mandate requires at least 65% of assets in AA and below-rated bonds, typically maintaining 15%–20% in AAA and sovereign holdings, 50%–55% in good-quality AA credits, and minimal single-A exposure. Despite its credit-risk orientation, the portfolio remains conservatively positioned relative to peers, balancing accrual income with adequate high-quality buffers.

Duration is actively managed within a 1.5–2.5-year band, complemented by selective use of government securities to navigate rate-cycle shifts. The portfolio is diversified across 55–60 issuers, with individual exposures typically capped at 5% for corporates and higher only for sovereigns. Liquidity risk is mitigated through sizable allocations to highly tradable AAA names such as Indian Oil, NTPC, Power Finance Corporation, REC, and Power Grid.

Recently, Mehrotra has selectively increased exposure to real-estate bonds and REITs, guided by conservative debt/equity and loan/value filters. The strategy continues to avoid weaker nonbanking financial company and microfinance exposures, a discipline that has supported the fund’s superior long-term risk-adjusted returns. Overall, the fund’s credit mix, diversification, and proactive monitoring framework, anchored by strong internal covenants and early-warning systems, remain key differentiators within the credit-risk category.