HDFC Multi Cap Fund Direct Growth INF179KC1BS5

HDFC Multi Cap Fund earns an Above Average Process Pillar rating.

The predominant contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 69%. The measure indicates the percentage of a firm's funds that have outperformed their respective category's median return for the period. The size of the portfolio management team also contributes to the process. With two portfolio managers, the fund is reasonably well-resourced. However, the process is limited by the parent firm's five-year retention rate of 76%, which raises concerns about long-term strategic consistency..

This strategy leans toward smaller, deeper value companies compared with its average peer in the Multi-Cap Morningstar Category. Looking at additional factor exposure, this strategy has consistently overweighted the volatility factor compared with Morningstar Category peers over the last few years, meaning it invests in stocks with a history of the higher standard deviation of returns. Such stocks tend to rise faster and fall harder than the broad market. High-volatility exposure contributes to stronger performance during bull markets, but often at the cost of losing more during downturns. In recent months, the strategy was more exposed to the Volatility factor compared with its Morningstar Category peers as well. The managers have also tended to overweight yield during recent years, shown by the portfolio's high exposure to dividends or buybacks. Higher-yield stocks can provide steady income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. In the most recent month, however, the fund's Yield exposure was in line with the Morningstar Category average. In addition, this strategy has favored high-quality stocks compared to peers over the years, which could be a good option for downside risk protection. Though it may trail peers during an economic boom, this orientation contributes to helping it weather periods of economic stress better. In recent months, however, the strategy had less Quality factor exposure over its peers. 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 by 4.1 percentage points in terms of assets compared with the category average, and its technology allocation is similar to the category. The sectors with low exposure compared with category peers are consumer defensive and utilities, with consumer defensive underweighting the average portfolio by 2.8 percentage points of assets and utilities similar to the average. The portfolio is positioned across 244 holdings and its assets are more dispersed than peers in the category. In particular, 20.8% of the fund’s assets are concentrated in the top 10 fund holdings, compared to the category average's 30.5%. And finally, in terms of portfolio turnover, this portfolio turns over its holdings less quickly than peers, potentially leading to lower costs for investors and eliminating a drag on performance.