Should investors be worried about the changes?
“HDFC Top 200 Fund has always been a largecap focussed scheme and I don’t think the recategorisation of this scheme will make major changes in your portfolio,” says Puneet Oberoi, Founder, Excellent Investment Advisors.
Many schemes are going through changes to comply with Sebi’s new norms for categorisation and rationalisation of mutual funds. Mutual fund advisors believe that unless there are changes in the fundamental attributes of a scheme or its portfolio, investors should not consider selling the scheme.
“If you think that the changes in the scheme will hamper your goals, say, by providing lower returns or the new changes are against your risk appetite, you should stay put. In this case, the midcap edge to the scheme will be lost and hence investors should expect lower returns,” says Pankaj Gera, a certified financial planner based in Delhi.
Currently, HDFC Top 200 Fund invests 76.45 per cent in giant stocks, 13.68 per cent in large stocks and around 10 per cent in midcap stocks. After the recategorisation, the scheme will lose its midcap holdings, which according to mutual fund advisors, were fetching better alpha for the scheme over the last couple of years.
According to Sebi’s new norms, a largecap scheme would be mandated to invest minimum 80 per cent in equity and equity related instruments. The scheme can invest the rest 20 per cent in debt securities, money market instruments, units issued by REITs and InvITs and non-convertible preference shares.
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