For index-plus returns
If you are looking to buy a fund that is close to mirroring the index, then HDFC Index Fund – Sensex Plus Plan (HDFC Sensex Plus) is a good option. The fund is also a good candidate to buy into market dips such as the present one. With a track record in excess of 10 years, this index fund delivered 20% annually since its launch in July 2002. That is a good 4 percentage points more than the Sensex.
The fund and suitability
HDFC Sensex Plus seeks to invest 80-90 per cent of its assets in the Sensex basket and reserves mandate to invest 10-20 per cent outside the basket. In other words, the risk that you will take on will be only as much as the index. However, you will have an opportunity to earn some extra returns through exposure outside the index.
This fund will suit the following investors: one, those wanting to limit their risk by taking exposure to bellwether index stocks. Such investors can do a regular SIP in this fund. With a very low expense ratio (1 per cent) and a limited exit load period (30 days), this fund is ideal if you wish to test waters in equities.
Two, the fund is a good candidate for those looking for a vehicle to capitalize on market falls. In significant market falls, instead of scouting for individual stock/fund opportunities, it is a good idea to buy in to the bellwether index if you do not have much time to track/choose funds. A market fall of 5 per cent or more often provides opportunities to buy small amounts and average costs.
For those wanting to use tools such as the ‘trigger option’, an index fund can be a good low cost option. HDFC Sensex Plus, although actively managed to the extent of stocks outside the index, charges only as much/lower than most other index funds, although it has delivered more, thanks to the active part of the portfolio.
The Sensex has currently fallen by about 6 per cent from January to date. Trailing price earnings ratios have fallen from over 18 times to 16.5 times. While forecasts are clearly not factoring much upside on earnings, falling commodities as well as less painful interest rates may mean that margins and eventually earnings could make a slow recovery.
While earning downgrades continue, the quantum is much lesser now, suggesting that it could be bottoming out. That means the next few months, at least until the December earnings, could provide opportunities for stock accumulation. Hence, investors could use dips of say 5 per cent or more in the index to buy into funds such as HDFC Sensex Plus, which are similarly positioned.
Performance and portfolio
HDFC Sensex Plus did not always hold a record of beating the index. In years such as 2005 and 2006, the fund managed only as much as the index. Only from 2008, did the fund begin to make a mark in terms of bettering the index. That year, the fund contained declines to 47 per cent as against the Sensex fall of 53 per cent.
While it just matched the index performance in 2009, it started consistently beating the index since. In fact, it has managed to keep pace with, or outperform the category average of active equity funds in some of those years.
HDFC Sensex Plus has all the 30 Sensex stocks, roughly in the same weights as the index. But the stocks outside the index are an interesting mix of mid- and large-sized companies. Some of them, such as the stock of Solar Industries, can be seen across many HDFC funds. Evidently, some of them are house calls.
India Glycols, Navneet Publications and SJVN are also some of the interesting picks.
The fund is managed by Vinay R. Kulkarni.
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dear vidya
you have been recommending one by one good fund every week. sometimes i tend to do sip in more than 20 funds .i already have sip for more than 12 funds as majority of the fund suggested by you. Am i going on right track?
Hello sir,
Thank you for taking time to read our mails. But pl. be wary fo investing in every scheme we recommend. We did put out a link for few months stating: “How to use FundsIndia’s weekly reviews”. I reproduce that below. Hope this helps:
How to use FundsIndia’s weekly fund reviews
FundsIndia sends recommendations / reviews of various mutual funds on a weekly basis. This service has been launched with an aim to help you make an informed decision with your investments. Through this service, we seek to keep you informed about the performance of a fund that you may hold or one that you may wish to invest in.
As investors, you would need to take a call on whether to invest in a fund based on your current portfolio and your risk appetite. Not every fund that is recommended through this column needs to be added to your portfolio. Such a move may lead to over-diversification or duplication of holding.
MADAM,
A GOOD RECOMMENDATION TO FOLLOW.it is an ideal opportunity to invest in equity
Mam,
Why to confuse investors with “weekly fund reviews”. Why everyone is trying to sell medicine than discussing about the problem. If every newspaper in India and professional blogs start writing about the medicine (mf schemes) then people would just want to try and make his financial health more poorer. Why are everyone talking about the best schemes / hot picks for week / month or year. Why are we not focusing on educating layman about simple risk analysis and basic financial planning.
Is FundIndia not getting into to the trap of mis-selling indirectly. We know about Indian mentality. They buy what is sold and no financial product is bought other than bank FDs.
Its painful to read that people are just blindly following your “weekly fund reviews” and starting as many SIPs as possbile.
Please help the investor.
All the Best!!
Hello Jay,
Thank you for your feed back.
1. First of all, we have no intention of asking people to buy funds every week and we know it can do more harm than good and have clearly stated so. If you have not had the chance to read the warning we carried for several weeks, with our calls and is also there in our blog here it is here: https://blog.fundsindia.com/blog/mutual-funds/how-to-use-fundsindias-weekly-fund-reviews/458 Request you to kindly read it. The purpose of this weekly review is indeed to educate investors about the characteristics of each fund and to know how they differ from the other. This will also help them keep track of their funds if they hold it. Hence, this is one way of informing investors about fund features and performance.
2. There is nothing in the call that claims that it is the “best fund” or “top five”. We believe the requirements of each individual will vary and therefore cannot say these funds are the best for him/her.
3. We have been constantly striving to educate investors through our monthly news letters which carries many articles on fund basics and financial planning basics. This blog has also discussed various topics that are not fund-recommendation related and which seek to equip investors in other investment avenues.
To add to it, in a first of its kind, we came up with a book called “Investment Guide for new-age professionals”, which talks about various investment options and how to approach investments in general. It has a foreword by Mr Narayana Murthy. If you have not had a chance to go through it pl see: https://blog.fundsindia.com/blog/general/investment-guide-for-todays-professionals/1794 . It is available for free download.
4. We have very consciously tried to stay away from a strategy that would ‘push’ products to investors and instead sought to help investors with information and knowledge that would equip them to make well-informed decisions.
To this end, I request you to take time to see the offerings that I mentioned above before coming to the conclusion you have.
Tks,
Vidya
Vidya, Kudos to you.
You have written so many words in reply which don’t give any answer to my query. Its shows your journalism skill in replying to query where people will read and forget why this explanation.
My only request is why can’t we stop talking / dissecting individual fund performance and ignoring the core issue. It clearly shows that paid articles are written to indirectly promote the AMC.If you take any magazine / newspaper / business TV shows everyone is talking about scheme recommendation.Its becoming a paid job to use the AMC brand names.
Hello Jay,
I think my response clarifies all that you had raised in your post. And I did not have to put my journalistic hat to do so 🙂
Yes, we intend to continue dissecting individual fund performance as we believe it is a value add we can offer. You are free to make an informed decision or not based on the inputs we provide. Tks, Vidya
Investors Jagte Raho!!!
Could you let me know the tracking error of this fund?
Hi Suresh,
Since the fund invests in stocks over and above the index, tracking error is not relevant here and is not disclosed by the fund. The fund has only kept its expenses as low as other index funds as it is not a fully actively managed fund. Tks, Vidya
Hi Vidya
Though they are passively managed fund, yet they are not free from tracking error because of the buying and selling pattern of Fund Manager
Hi Megha, you are right. But what matters is the alpha generated by investing outside of the index. As long as net returns make up for the same over a 3-5 year time frame, it should not matter much. Tks, vidya
Could you let me know the tracking error of this fund?
Hi Suresh,
Since the fund invests in stocks over and above the index, tracking error is not relevant here and is not disclosed by the fund. The fund has only kept its expenses as low as other index funds as it is not a fully actively managed fund. Tks, Vidya
Hi Vidya
Though they are passively managed fund, yet they are not free from tracking error because of the buying and selling pattern of Fund Manager
Hi Megha, you are right. But what matters is the alpha generated by investing outside of the index. As long as net returns make up for the same over a 3-5 year time frame, it should not matter much. Tks, vidya
Hi Vidya. While trying to invest in this fund via FundsIndia , I get a option of these 3 funds :
1) HDFC Index Fund – Sensex Plus Plan – Growth – Post Addendum
2) HDFC Index Fund – Sensex Plan – Growth
3) HDFC Index Fund – Nifty Plan – Growth
How are they different and which one is your recommendation?
Hi Vaibhav, It is HDFC Index Fund Sensenx Plus plan – Post Addendum. the other 2 are pure index plans and this is index plus some additional stocks (some amt. of active management). Thanks for your other feedback. It is being looked into. thanks.
Thanks Vaibhav but the blog responses are not usually too time bound and monitored like a formal ticket raised. Hence if there is any advisory query that is urgent, in future, would request you to use the ‘Ask Advisor’ feature in your help tab to help us track and respond better. thanks, Vidya
Thanks Vidya. The turnaround time is phenomenal.
Hi Vidya. While trying to invest in this fund via FundsIndia , I get a option of these 3 funds :
1) HDFC Index Fund – Sensex Plus Plan – Growth – Post Addendum
2) HDFC Index Fund – Sensex Plan – Growth
3) HDFC Index Fund – Nifty Plan – Growth
How are they different and which one is your recommendation?
Hi Vaibhav, It is HDFC Index Fund Sensenx Plus plan – Post Addendum. the other 2 are pure index plans and this is index plus some additional stocks (some amt. of active management). Thanks for your other feedback. It is being looked into. thanks.
Thanks Vaibhav but the blog responses are not usually too time bound and monitored like a formal ticket raised. Hence if there is any advisory query that is urgent, in future, would request you to use the ‘Ask Advisor’ feature in your help tab to help us track and respond better. thanks, Vidya
Thanks Vidya. The turnaround time is phenomenal.
dear vidya
you have been recommending one by one good fund every week. sometimes i tend to do sip in more than 20 funds .i already have sip for more than 12 funds as majority of the fund suggested by you. Am i going on right track?
Hello sir,
Thank you for taking time to read our mails. But pl. be wary fo investing in every scheme we recommend. We did put out a link for few months stating: “How to use FundsIndia’s weekly reviews”. I reproduce that below. Hope this helps:
How to use FundsIndia’s weekly fund reviews
FundsIndia sends recommendations / reviews of various mutual funds on a weekly basis. This service has been launched with an aim to help you make an informed decision with your investments. Through this service, we seek to keep you informed about the performance of a fund that you may hold or one that you may wish to invest in.
As investors, you would need to take a call on whether to invest in a fund based on your current portfolio and your risk appetite. Not every fund that is recommended through this column needs to be added to your portfolio. Such a move may lead to over-diversification or duplication of holding.
MADAM,
A GOOD RECOMMENDATION TO FOLLOW.it is an ideal opportunity to invest in equity
Mam,
Why to confuse investors with “weekly fund reviews”. Why everyone is trying to sell medicine than discussing about the problem. If every newspaper in India and professional blogs start writing about the medicine (mf schemes) then people would just want to try and make his financial health more poorer. Why are everyone talking about the best schemes / hot picks for week / month or year. Why are we not focusing on educating layman about simple risk analysis and basic financial planning.
Is FundIndia not getting into to the trap of mis-selling indirectly. We know about Indian mentality. They buy what is sold and no financial product is bought other than bank FDs.
Its painful to read that people are just blindly following your “weekly fund reviews” and starting as many SIPs as possbile.
Please help the investor.
All the Best!!
Hello Jay,
Thank you for your feed back.
1. First of all, we have no intention of asking people to buy funds every week and we know it can do more harm than good and have clearly stated so. If you have not had the chance to read the warning we carried for several weeks, with our calls and is also there in our blog here it is here: https://blog.fundsindia.com/blog/mutual-funds/how-to-use-fundsindias-weekly-fund-reviews/458 Request you to kindly read it. The purpose of this weekly review is indeed to educate investors about the characteristics of each fund and to know how they differ from the other. This will also help them keep track of their funds if they hold it. Hence, this is one way of informing investors about fund features and performance.
2. There is nothing in the call that claims that it is the “best fund” or “top five”. We believe the requirements of each individual will vary and therefore cannot say these funds are the best for him/her.
3. We have been constantly striving to educate investors through our monthly news letters which carries many articles on fund basics and financial planning basics. This blog has also discussed various topics that are not fund-recommendation related and which seek to equip investors in other investment avenues.
To add to it, in a first of its kind, we came up with a book called “Investment Guide for new-age professionals”, which talks about various investment options and how to approach investments in general. It has a foreword by Mr Narayana Murthy. If you have not had a chance to go through it pl see: https://blog.fundsindia.com/blog/general/investment-guide-for-todays-professionals/1794 . It is available for free download.
4. We have very consciously tried to stay away from a strategy that would ‘push’ products to investors and instead sought to help investors with information and knowledge that would equip them to make well-informed decisions.
To this end, I request you to take time to see the offerings that I mentioned above before coming to the conclusion you have.
Tks,
Vidya
Vidya, Kudos to you.
You have written so many words in reply which don’t give any answer to my query. Its shows your journalism skill in replying to query where people will read and forget why this explanation.
My only request is why can’t we stop talking / dissecting individual fund performance and ignoring the core issue. It clearly shows that paid articles are written to indirectly promote the AMC.If you take any magazine / newspaper / business TV shows everyone is talking about scheme recommendation.Its becoming a paid job to use the AMC brand names.
Hello Jay,
I think my response clarifies all that you had raised in your post. And I did not have to put my journalistic hat to do so 🙂
Yes, we intend to continue dissecting individual fund performance as we believe it is a value add we can offer. You are free to make an informed decision or not based on the inputs we provide. Tks, Vidya
Investors Jagte Raho!!!