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In today’s fast-changing financial world, many investors face confusion when choosing the right equity investment strategy. Should they invest in large-cap funds, mid-cap funds, or small-cap funds? How often should they rebalance their portfolio? Which fund managers should they trust? To simplify these decisions, HDFC Mutual Fund introduces the HDFC Diversified Equity All Cap Active Fund of Fund (FOF) through its latest New Fund Offer (NFO), available from 10th to 24th September 2025.
This fund is designed to make investing in equities simple and convenient by providing diversified exposure to different market segments under expert management. Here’s everything you should know about this new and promising offering.
What is HDFC Diversified Equity All Cap Active FOF?
The HDFC DEACAF (FOF) is an open-ended fund of funds scheme. It invests in units of domestic equity-oriented mutual fund schemes covering large-cap, mid-cap, and small-cap segments. The main goal is to generate long-term capital appreciation or income for investors by leveraging professional fund management expertise.
Key Investment Objective:
- To invest in units of various equity-oriented schemes.
- To generate wealth over the long term by focusing on diversified market capitalizations.
Key Features and Advantages
1. Comprehensive Market Coverage
- The fund offers all-round exposure by investing across large, mid, and small-cap funds.
- This approach helps in capturing growth from different market phases without depending on a single market segment.
2. Systematic Rebalancing
- A disciplined framework-driven approach is used to allocate investments across market caps.
- Monthly reviews ensure the portfolio remains balanced according to market conditions, reducing the risk of emotional or biased decisions by investors.
3. Simplified Investment Process
- Investors don’t need to individually choose and monitor multiple funds.
- This single-scheme solution offers convenience and operational ease, making it suitable for those who prefer a hassle-free investment journey.
4. Tax Efficiency
- Rebalancing occurs within the scheme itself, reducing capital gains tax and transaction costs compared to managing multiple individual funds.
Asset Allocation at a Glance
- Equity-Oriented Schemes: 95% to 100% of the fund’s net assets will be invested in units of domestic equity mutual fund schemes across market caps.
- Debt Securities & Money Market Instruments: Up to 5% for liquidity and stability purposes.
This balanced allocation ensures that the fund remains well-diversified, offering the potential for growth while managing risk.
Ideal Investor Profile
This fund suits investors who:
- Want to gain diversified equity exposure without the complexity of picking individual mutual funds.
- Are looking for a long-term investment strategy.
- Prefer systematic, expert-driven management of their investments.
- Wish to avoid behavioral investing mistakes, such as chasing recent market trends.
- Are comfortable with equity market risks and aim for capital appreciation over time.
Important Considerations
- The fund does not guarantee achievement of its investment objective.
- Investors must understand that mutual fund investments are subject to market risks.
- Exit Load: A 1% exit load applies if the units are redeemed within one year from allotment.
- The minimum investment during the NFO is ₹100. Investors must understand that mutual fund investments are subject to market risks.
Investors should always consult their financial advisors before making any investment decision.
Benefits of Choosing HDFC DEACAF (FOF)
Multi-Fund Manager Strategy
- Combines the expertise of different fund managers who specialize in large-cap, mid-cap, and small-cap funds.
- Enhances long-term performance by mixing different investment styles that perform differently under various market conditions.
Counter-Cyclical Investment Approach
- The fund takes a valuation-sensitive approach and adjusts allocations based on market sentiments and valuations.
- This disciplined approach helps avoid the common investor mistake of investing based on recent market trends (recency bias).
Reduced Behavioral Risks
- Since rebalancing is done systematically by professionals, investors are less likely to make impulsive decisions.
- This increases the chances of achieving long-term wealth creation goals.
Operational Ease and Time Saving
- Instead of managing multiple funds or rebalancing manually, investors benefit from a single, well-managed solution.
Tax and transaction cost efficiency is another major benefit.
