The stock markets have been highly volatile for quite some time now. To add to the worries of investors, crude oil prices are trading at all-time highs.
The stock markets have been highly volatile for quite some time now. To add to the worries of investors, crude oil prices are trading at all-time highs.
The only bit of good news is that inflation is under control - it fell to below 3% last week, the lowest in the last five years. With the rupee getting stronger against the US dollar, passive investors can prefer “relatively safer” debt funds to park their money.
HDFC Income Fund has been in the industry for quite some time now — it was launched on August 10, 2000. The scheme has grown at a CAGR of 8.20% since inception. It has performed well when compared with others funds that were launched at around the same time.
However, in more recent times, the scheme has underperformed its peer group. Over a period of last one year, HDFC Income Fund has only managed to give a compounded annualised return of 5.80% whereas its benchmark (Crisil Composite Bond Fund Index) managed 6.08%.
On a three year scale, the scheme has underperformed with compounded annualised returns of 4.56%, whereas the benchmark yielded 5.31% the peer group average was 5.66%.
The underperformance of the scheme has affected the fund size badly. The total fund size has fallen from more than Rs 272 crore in September 2006 to Rs 231.95 crore in September 2007.
The fund has always kept itself heavily invested in corporate bonds over the last one year. The fund manager doesn’t seem to be comfortable investing in fixed deposits and securitised items. Over the last year, nothing has been invested in such instruments.
The minimum investment in the scheme is Rs 5,000. There is no entry fee for the scheme.
At the time, an exit load of 0.5% is charged if the investment value is less than Rs 10 lakh and the exit is done within 6 months.
If the amount is more than Rs 10 lakh or the investment is for a period of more than 6 months, the exit load is zero.
The expense ratio for the scheme is 2.11% as of September, 2007, which is quite high when compared with other schemes in the group.
By arrangement with mutualfundsindia.com, a unit of Icra Online
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