Launched and managed by the HDFC Asset Management Company, the HDFC Corporate Bond Fund is a debt mutual fund option. If you are someone who is aiming to make a short-term or medium-term profit by investing in securities with a lock-in period of up to 3 years, then you can consider exploring the HDFC Bond Fund.
Key Highlights of the HDFC Corporate Bond Fund
Since its inception, the HDFC Corporate Bond Fund has maintained an allocation of at least 80% to AA+ rated corporate bonds. The remaining 20% is allocated to various Money Market Instruments, Government Securities, InVITs, and REITs.
Here are the trailing returns of HDFC Corporate Bond Fund over varying time frames:
| Period | Returns (in %) |
|---|---|
| 1-year | 9.12% |
| 3-year | 6.48% |
| 5-year | 7.23% |
| Since launch | 8.14% |
One can start investing in the HDFC Corporate Bond Fund with a minimum SIP amount of ₹100. Moreover, the Growth option of HDFC Corporate Bond does not attract any exit load. All these conditions render it a popular mid-term investment choice for investors with a risk-averse profile.
Pros and Cons of Investing in the HDFC Corporate Bond Fund
When analysing the advantages of investing in HDFC Corporate Bond you will come across the following points:
- The 1-year, 3-year and 5-year average returns are highly competitive and even more when compared to most corporate bonds in the same category.
- The expense ratio of the fund is less than 0.3%.
- Investors do not have to pay any exit load when they sell off their positions.
However, there is only one significant drawback. As the Asset Under Management (AUM) of the fund has already surpassed ₹20,000 crore, now the rate of return has begun to decelerate.
HDFC Corporate Bond Fund House Details
HDFC Asset Management Company, a direct subsidiary of the HDFC Group, sponsors the HDFC Corporate Bond Fund. In 1999, this debt fund was first introduced as a collaborative project between Standard Life Investments Limited (SLI) and the Housing Finance Development Corporation Limited (HDFC).
At present, HDFC AMC stands as one of the top profitable fund houses, boasting 4.1 trillion in Assets Under Management (AUM). In August 2018, the company first went public through an IPO. Subsequently, the AMC attracted nearly 26% of the public stake, primarily due to its past performance and the trust shown by over 9.1 million HDFC Bank account holders. This astonishing figure has enabled the HDFC Corporate Bond Fund to secure the largest market share of retail investor assets.
Who Can Invest in HDFC Corporate Bond?
Primarily comprising debt and securitised instruments, the HDFC Corporate Bond Fund is known for its moderate risk profile. Although the projected returns from this investment are expected to beat term deposits, your money is not entirely immune to market volatility.
Hence, if you are someone who is aiming to make short-term to medium-term gains, you can definitely check out the HDFC Corporate Bond Fund. The following is a list of eligible parties who are allowed to purchase units of HDFC Corporate Bond Fund.
- Resident Indians either singly or jointly
- Karta on behalf of a Hindu Undivided Family (HUF)
- A minor via his/her natural guardian or court-stated legal guardian (applications are to be made as a sole investor)
- Banks and other financial institutions
- Limited Liability Partnerships
- Partnership Firms
- Association of persons, companies, public sector undertakings and corporate houses
- SEBI-registered mutual funds
- Armed forces or paramilitary units
- Religious and Charitable Trusts
- SEBI-registered foreign investors
- NRIs, PIOs and OICs either on a repatriation or non-repatriation basis (depending on RBI norms)
- Other individuals approved by the HDFC AMC
Final Word:
On carefully analysing the HDFC Corporate Bond Fund, you can see that the fund house strives to maintain a well-diversified portfolio that complements its adopted investment philosophy. It is highly popular among mid-term and short-term investors due to its high liquidity. However, before investing, it is important to realise that there is a chance of financial loss, although low, as the fund house does not guarantee returns.
Frequently Asked Questions
The HDFC Bond Fund is mandated to incorporate a minimum of 80% of its assets in the form of AA+ rated bonds or above. Investors in this fund are subject to taxation on capital gains when selling their holdings. An investor will be liable to pay taxes as per their applicable income tax slab rates.
You can see an expense ratio of 0.61% for the HDFC Corporate Bond Fund (as of November 2024). It is typically the amount charged by the fund house from the investors to manage a bond fund for a particular fiscal year.
Yes, corporate bond funds constitute a type of debt fund that often comes with high credit ratings. These bonds act as loan agreements where the investors play the role of lenders and agree to deposit an amount for a set period. In return, the borrowing company pays an interest throughout the tenure of the investment.
