Jun 15, 2024 41 min read

Review of HDFC Manufacturing Fund: Is it Worth Investing?

Introducing the HDFC Manufacturing Fund, a valuable addition to HDFC Mutual Fund's portfolio. If we talk about the HDFC AMC it’s one of India's top three mutual funds and the largest fund house in India. So why did HDFC fund house launch an equity thematic fund?

The reason behind this is India's expected rapid manufacturing sector growth in the next five to seven years. This rise in Growth expectations has four factors: a huge domestic market, affordable labor, better infrastructure, and easier access to credit. So it’s time to know about what this fund brings to you.

Understanding of HDFC Manufacturing Fund

Since its recent inception, the HDFC Manufacturing Fund is just a month old. This specialized fund invests in companies from India’s manufacturing sectors. These companies are capable of replacing imported products with locally manufactured items and expanding the export of Indian-made products. By focusing on such companies, the fund aims to support job creation within the manufacturing sector. This thematic fund also benchmarks its performance on the Nifty India Manufacturing Index and provides flexibility across various sizes.

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What Unique Investment Strategy Does the HDFC Manufacturing Fund Follow?

The HDFC Manufacturing Fund mainly invests in stocks from the manufacturing sector, making up at least 80% of its holdings, and employs a detailed bottom-up approach meaning It picks companies one by one based on their quality and growth potential, rather than just following overall trends. This approach helps identify high-quality companies with promising future development and strong Equity returns. The fund ensures diversification across different sizes of manufacturing companies to spread risk effectively. By doing so, it aims to reduce potential losses while maximizing opportunities within the manufacturing sector's growth potential.

HDFC Manufacturing Fund Follow

Let's explore portfolio analysis to assess how effectively this fund is positioned for future success!

How HDFC Manufacturing Manages Its Portfolio Allocation

The HDFC Manufacturing Fund allocates its investments across companies of different sizes to balance risk and growth potential. Currently, 57.51% of the fund's assets are invested in large-cap companies, which are typically well-established and financially stable, offering more predictable returns. Mid-cap companies, which are growing and have significant growth potential, make up 21.23% of the fund's assets. Lastly, 7.81% of the assets are allocated to small-cap companies, which, while riskier, can offer high growth potential. This diversified approach helps the fund capture opportunities across various segments of the manufacturing sector while managing risk effectively.

HDFC Manufacturing Manages Its Portfolio Allocation

Sector Allocation Strategy of HDFC Manufacturing Fund

Sector allocation spreads a fund's investments across different economic areas to reduce risk, balance performance, and achieve stable returns.

The HDFC Manufacturing Mutual Fund invests across various sectors to capitalize on growth in the manufacturing industry. The largest portion, 24.24%, is in the automobile sector, showing confidence in its potential. Capital goods make up 19.1%, focusing on machinery and equipment. Healthcare, at 14.38%, includes medical manufacturing and pharmaceuticals. Energy, accounting for 7.9%, involves power and fuel companies, and 6.69% is in metals and mining for raw materials. This diversified allocation aims to capture growth and manage risk across different segments of the manufacturing sector.

SectorAllocation (%)
Automobile 24.24
Capital Goods 19.1
Healthcare 14.38
Energy 7.9
Metals & Mining 6.69

HDFC Manufacturing Fund: Portfolio Holdings

The portfolio holdings of the HDFC Manufacturing Fund, show the percentage allocation to specific companies within the manufacturing sector. Mahindra & Mahindra Ltd. contributes 5.94% to the fund's portfolio, underscoring its importance in India's vehicle manufacturing. Maruti, established in 1981, commands a significant 42% share of the Indian passenger car market and receives a 4.9% allocation from the fund, highlighting its leadership and innovation in the automotive sector. This reflects the Manufacturing Mutual Funds strategy to invest in leading manufacturers driving market dominance and innovation.

CompanyHoldings (%)
Mahindra & Mahindra Ltd. 5.94
Maruti Suzuki India Ltd. 4.9
Sun Pharmaceutical Industries Ltd. 4.73
Tata Motors Ltd. 4.59
Reliance Industries Ltd. 4.21

Experts of HDFC Manufacturing Fund

Rakesh Sethia, Head of Equity at HDFC AMC, brings extensive experience and expertise to fund management and equity analysis. With over 15 years specifically dedicated to managing funds, he has demonstrated a consistent track record of strong performance across diverse market segments. Rakesh's overall professional journey spans more than 19 years, including 17 years focused on equity research. His deep understanding and specialization in sectors such as Energy, Telecom, Logistics, Transportation, and Consumer Durables underscore his ability to effectively navigate and capitalize on opportunities within these industries for the benefit of investors.


Rakesh Sethia
Head of Equity

Suitability

The HDFC Manufacturing Fund could benefit from the Make in India initiatives, promoting local manufacturing and boosting India's exports, potentially creating more jobs. It's a good choice for investors who understand economic trends and want higher returns than regular equity funds. If you're interested, consider investing through SIP for 3 to 5 years to manage risks and maximize growth in the manufacturing sector.

Position yourself for growth—Invest in the Axis India Manufacturing Fund today!

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