Wish you had an investment option that managed a decent absolute return without your having to time the equity or debt markets? HDFC Multiple Yield Fund has precisely this objective. With a 9 per cent annualised return over five years and a 9.9 per cent return over three years, it has turned in a reasonable showing over the long term.
The market fancy for dividend yield (essentially value) stocks over the past year has lifted this fund’s one-year return to an unusually high 21.7 per cent. While this return level may not be sustainable, the fund remains a good option for investors who would like to go defensive.
With its Monthly Income Plan-like structure, the Fund is suitable for conservative investors who seek better-than-debt returns. It differs from an MIP mainly in the way its debt and equity portfolios are managed.
The fund’s debt portion, which can be 85-95 per cent of the portfolio, is invested mainly in corporate instruments with a 15-month term. The fund follows a buy-and-hold strategy here, akin to a fixed maturity plan, to sidestep interest rate risk. In the equity portion, which can form 15-25 per cent of the assets, the fund takes a defensive tack, seeking out stocks with high dividend yield. A minimum two-year holding period is essential for investors seeking to make the best of this fund.
In its latest November portfolio, HDFC Multiple Yield leaned towards short-term instruments in the debt portion. 55 per cent of the assets were in commercial paper/CDs with another 22 per cent in securitized debt/credit exposures. The equity exposure was closer to the higher end of the allocation at 21 per cent. In line with its objectives, the fund’s debt portfolio hasn’t changed much over the past year or so. The only change appears to be the addition of commercial paper exposures to the existing portfolio of certificates of deposit and securitised debt.
The equity portfolio, which has run up from about 15 per cent of assets to 20 per cent in a year with the market rally, appears to have been rebalanced at regular intervals. The fund’s choice of dividend yield candidates has been offbeat. Staying away from the conventional oil and PSU majors, the portfolio features mid-cap yet low Beta choices. HBL
