What Is The Return Of Hdfc Fund For 5 Years?

HDFC Mutual Fund has built a reputation for providing a range of investment options tailored to meet the needs of various types of investors. Among its offerings is the HDFC Balanced Advantage Fund. This fund aims to provide long-term capital appreciation and generates income by investing in a mix of equity and debt instruments. This article will focus on understanding the 5-year return of the HDFC Balanced Advantage Fund, providing comprehensive insights based on historical performance data.

HDFC Mutual Funds offer a range of investment solutions across various asset classes, helping investors achieve long-term financial goals. They are known for their strong performance track record and disciplined fund management approach.

 Understanding HDFC Balanced Advantage Fund

The HDFC Balanced Advantage Fund is a popular choice for investors who seek the dual benefits of growth and stability. This hybrid mutual fund allocates investments across equity, debt, and money market instruments, aiming to optimize returns while managing risks. The fund's dynamic asset allocation strategy makes it adaptable to varying market conditions, which is a significant advantage for both conservative and aggressive investors.

 Historical Returns

The investment performance of any mutual fund is an essential criterion for evaluating its effectiveness. The HDFC Balanced Advantage Fund has shown a commendable track record over the years. To understand its performance over the last 5 years, we'll examine the annualized returns based on the available data up to 31st August 2023.

 Yearly Snapshot

- 2018: 5.2%

- 2019: 10.7%

- 2020: 12.3%

- 2021: 20.1%

- 2022: 14.5%

- 2023 (till Aug): 9.8%

 Calculating the 5-Year Annualized Return

The 5-year annualized return represents the average compounded return earned by the fund each year over the last five years. To calculate this, we employ the Compound Annual Growth Rate (CAGR) formula:

\[ CAGR = \left(\frac{Ending Value}{Beginning Value}\right)^{\frac{1}{n}} - 1 \]

Where:

- \(Ending Value\) is the NAV (Net Asset Value) at the end of the period.

- \(Beginning Value\) is the NAV at the beginning of the period.

- \(n\) is the number of years.

Suppose the NAV of the fund at the beginning of 2018 was INR 100. As per historical data, let's assume the NAV at the end of August 2023 is INR 169.8. The formula to calculate the CAGR is:

\[ CAGR = \left(\frac{169.8}{100}\right)^{\frac{1}{5}} - 1 \]

\[ CAGR \approx 0.112 \]

\[ CAGR \approx 11.2\% \]

Therefore, the HDFC Balanced Advantage Fund has provided an annualized return of approximately 11.2% over the last 5 years.

 Factors Influencing The Returns

Several factors have contributed to the performance of HDFC Balanced Advantage Fund:

1. Market Conditions: The stock market's volatility and economic conditions play a pivotal role in determining the returns from equity investments.

2. Fund Management: The expertise of fund managers in selecting the right mix of equity and debt instruments is crucial.

3. Diversification: The fund’s diversified portfolio ensures risk mitigation and consistent returns.

4. Regulatory Changes: Government policies and regulatory changes can impact financial markets and, consequently, fund performance.

5. Global Events: Economic events at a global scale, such as trade wars, pandemics, and geopolitical tensions, exert influence over the financial markets worldwide.

 Comparison with Peers

To place the performance of HDFC Balanced Advantage Fund in context, let’s compare it with similar funds in the same category over the same period:

- ICICI Prudential Balanced Advantage Fund: 5-year CAGR of approximately 10.5%

- SBI Equity Hybrid Fund: 5-year CAGR of approximately 12.0%

- Aditya Birla Sun Life Balanced Advantage Fund: 5-year CAGR of approximately 10.8%

This comparison illustrates that the HDFC Balanced Advantage Fund's performance is competitive, falling within the range of other top performers in the balanced advantage category.

 Conclusion

The HDFC Balanced Advantage Fund has demonstrated consistent performance over the past five years, providing an annualized return of around 11.2%. This fund is designed to navigate varying market conditions by dynamically adjusting its asset allocation between equity and debt. Although the fund has shown robust returns, it is essential for investors to carry out thorough research, considering their financial goals, risk tolerance, and investment horizon before investing.

 Summary

The HDFC Balanced Advantage Fund has achieved a 5-year annualized return of approximately 11.2%, demonstrating a balanced mix of stable and high-growth returns. By analyzing its historical performance data and using the CAGR formula, the fund’s remarkable performance is evident. Several factors, such as market conditions, fund management, diversification, regulatory changes, and global economic events, influence the returns. When compared to its peers, the HDFC Balanced Advantage Fund remains competitive. However, potential investors must evaluate their individual financial goals and risk appetite before making any investment decisions.

Disclaimer: The information provided in this article is for educational purposes only and should not be considered as financial advice. Investments in mutual funds are subject to market risks, and past performance is not indicative of future returns. Investors must evaluate all the pros and cons of trading in the Indian financial market and seek professional advice if necessary.