HDFC Large and Mid Cap Fund Reinvestment of Income Distribution cum Cptl Wdrl Opt INF179KA1RV7

HDFC Large and Mid Cap Fund earns an Above Average Process Pillar rating.

The most substantial contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 70%. The measure indicates the percentage of a firm's funds that have beat their respective category's median return for the period. Excellent risk-adjusted performance also influences the rating. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. However, the process is limited by the parent firm's five-year retention rate of 73%, which raises concerns about long-term strategic consistency..

This strategy tends to hold smaller, deeper value companies compared with its average peer in the Large & Mid-Cap Morningstar Category. Analyzing additional factors, this strategy tilts consistently toward stocks with lower quality or the shares of companies with more financial leverage and lower profitability, compared with Morningstar Category peers over the past few years. Such positions do not tend to provide much ballast for a portfolio. In the latest month, the strategy was also less exposed to the Quality factor compared with Morningstar Category peers. This strategy also has had an overweight bias to the volatility factor over these years, meaning it has owned companies that have a higher historical standard deviation of returns. Such exposure tends to pay off when markets are hot and to be costly when they are not. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. Given the high trading volume of holdings, this fund also holds highly liquid assets. More-liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to suffer from a significant loss. Nevertheless, the fund's Liquidity exposure was in line with peers in the latest month. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in financial services and healthcare relative to the category average by 5.0 and 3.2 percentage points, respectively. The sectors with low exposure compared with category peers are consumer cyclical and basic materials, underweight the average by 3.5 and 2.9 percentage points of assets, respectively. The portfolio is composed of 219 holdings and its assets are more dispersed than peers in the category. In particular, 22.4% of the portfolio's assets are concentrated in the top 10 fund holdings, as opposed to the category average's 31.5%.