Top 3 HDFC Mutual Funds for Lump Sum Investment

HDFC Mutual Fund, one of the largest mutual fund houses in India, has earned the trust of investors with consistent long-term returns.

Over the last few years, several equity mutual funds of HDFC AMC have performed well, turning out to be top performers in their respective categories.

There are some key characteristics of HDFC Mutual Fund equity schemes that are responsible for the good performance.

• HDFC Mutual Fund is backed by strong risk management techniques and robust investment process, which has helped it do well over the long run.
• The fund house adopts a blend of growth and value-driven investment strategies.
• It avoids taking position on momentum-driven bets, even if it results in short-term underperformance.
• The fund managers follow the 'buy-and-hold' approach to investment. They hold stocks with a long-term view, resulting in a low turnover ratio of 20-40%.

This strategy has resulted in strong performance, particularly during market rallies, while the performance during market downturns is reasonable too.

On that note, let's look at the top 3 equity schemes from HDFC Mutual Fund.

We have shortlisted these schemes based on combined quantitative score which includes 6-month, 1-year, 3-year, and 5-year rolling returns along with risk-reward ratios such as standard deviation, sharpe, sortino, and up/down capture ratio.

Performance Snapshot - Top 3 HDFC Mutual Funds

	1 Yr (%)	3 Yr (%)	5 Yr (%)	10 Yr (%)	Std Dev	Sharpe	Sortino
HDFC Mid Cap Fund	21.46	27.90	31.19	18.79	13.82	0.43	0.93
HDFC Focused Fund	23.73	25.97	27.88	15.34	10.30	0.48	1.15
HDFC Flexi Cap Fund	22.94	24.77	27.32	15.85	11.12	0.43	1.04
NIFTY 500 - TRI	15.09	16.39	21.58	13.82	12.84	0.24	0.48
Nifty Midcap 150 - TRI	18.40	23.81	29.90	18.33	15.52	0.33	0.66

Source: ACE MF

#1 HDFC Mid Cap Fund

Launched in June 2007, HDFC Mid Cap Fund (earlier HDFC Mid-Cap Opportunities Fund) is the most popular scheme in the mid cap mutual fund category.

The fund has firmly established its position in the category by delivering above-average returns across diverse market conditions.

It has flourished under the supervision of its fund manager, Chirag Setalvad, who is known for his strong conviction in mid-cap and small-cap ideas.

In the last 5 years, HDFC Mid Cap Fund grew at a CAGR of 31.2% on a rolling return basis compared to 29.9% in the Nifty Midcap 150 - TRI index.

As of 31 July 2025, the fund invested 65% of its assets in midcaps, 20.4% in smallcaps, and 7.4% in largecaps.

The fund's top stocks are Max Financial Services (4.6%), Balkrishna Industries (3.8%), and Coforge (3.2%).

Its top sectors are auto & ancillaries (16.4%), banks (13%), and pharma & healthcare (12%).

The fund has benefitted from its strategy of maintaining a well-diversified portfolio of high-conviction, fundamentally sound stocks available at reasonable valuations.

Moreover, it steers clear of chasing market trends which helps it reduce the risk while rewarding its investors adequately in the long run.

#2 HDFC Focused Fund

Launched in September 2004, HDFC Focused Fund, previously known as HDFC Core & Satellite Fund, invests in a maximum of 30 stocks across sectors.

The fund primarily targets well-established large-cap stocks for the core portion of its portfolio while pursuing growth opportunities with substantial allocation to small and mid-cap stocks.

In the last 5 years, HDFC Focused Fund grew at a CAGR of 27.9% on a rolling return basis compared to 21.6% in the Nifty 500 - TRI index.

As of 31 July 2025, the fund invested 65.9% of its assets in large caps, 5.6% in midcaps, 13.8% in smallcaps.

The fund's top stocks are ICICI Bank (9.7%), HDFC Bank (8.5%), and Axis Bank (7.1%).

Its top sectors are banks (35.7%), auto & ancillaries (16.9%), and pharma & healthcare (8%).

By targeting quality stocks available at reasonable valuations, the fund has managed to reduce risk due to a strong margin of safety at the time of investing.

The fund has excelled in identifying high-potential opportunities across marketcaps, delivering impressive long-term growth while controlling risk.

#3 HDFC Flexi Cap Fund

launched in January 1995 as HDFC Equity Fund, it was originally structured as a Multi Cap fund with a preference for largecaps.

It underwent a reclassification in January 2021, transforming into HDFC Flexi Cap Fund to adhere to market regulator's revised category definition.

Under its current mandate the fund continues to employ a dynamic investment approach, allocating across marketcaps depending on the available opportunities, but with a bias towards largecaps.

Consequently, the transition to a Flexi Cap fund category did not have any impact on the underlying investment philosophy of the scheme.

In the last 5 years, HDFC Flexi Cap Fund grew at a CAGR of 27.3% on a rolling return basis compared to 21.6% in the Nifty 500 - TRI index.

As of 31 July 2025, the fund invested 74.3% of its assets in large caps, 4% in midcaps, and 9.9% in smallcaps.

The fund's top stocks are ICICI Bank (9.7%), HDFC Bank (9%), and Axis Bank (6.9%).

Its top sectors are banks (35.5%), auto & ancillaries (14.5%), and pharma & healthcare (9%).

While the fund tends to witness muted growth during bear markets, its performance shines in bullish market phases, offering investors attractive rewards over complete market cycles.

Its focus on creating a well-diversified portfolio of fundamentally sound stocks positions it for superior long-term growth.

Conclusion

The equity schemes of HDFC Mutual Fund have done well over the years and have rewarded investors with meaningful gains over the long run.

However, as an investor one should ideally avoid concentrating investments in schemes belonging to a particular fund house.

Doing so may result in polarised returns as the investment will be skewed towards a set of stocks, sectors, marketcap, or investment style.

In other words, if you carry exposure to two or more schemes within the same fund house, it is likely that the schemes will mirror each other in terms of outperformance and underperformance.

So, when investing, one should aim for optimal diversification by analysing the composition of portfolio.

Avoid adding multiple schemes with high portfolio overlap as it may impact the overall returns.

Happy investing.

#Table Note: Data as of August 25, 2025
The securities quoted are for illustration only and are not recommendatory
Past performance is not an indicator for future returns.
Returns are on a rolling basis and in %. Direct Plan-Growth option.
Those depicted over 1-Yr are compounded annualised.
Risk ratios are calculated over a 3-year period assuming a risk-free rate of 6% p.a.

Disclaimer: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Registration granted by SEBI, enlistment of IA with Exchange and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.