HDFC Infrastructure Fund -Direct Plan - Growth Option INF179K01WQ2

HDFC Infrastructure earns an Average Process Pillar rating.

The main contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 65%. The measure indicates the percentage of a firm's funds that have beat their respective category's median return for the period. The parent firm's impressive risk-adjusted performance, as shown by its average overall Morningstar Rating of 3.4 stars, also supports the rating. However, the process is limited by the fund's weak long-term risk-adjusted performance. This can be seen in its 10-year alpha calculated relative to the category average, which suggests that the process has struggled over that period.

This strategy leans toward smaller, more value-oriented companies than its average peer in the Equity - Infrastructure Morningstar Category. Looking at additional factor exposure, this strategy has consistently tilted toward companies with relatively higher trading volumes in the last few years. This gives the managers more flexibility during bear markets to sell without adversely affecting prices. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also favored low-quality stocks. This means the fund avoids holding companies that are consistently profitable, growing, and have solid balance sheets. Lacking this ballast, the fund's prospects could rest on its ability to surpass peers during economic booms. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. Additionally, the managers have tended to overweight yield, shown by the portfolio's high exposure to stocks paying dividends or buying back shares. High-yield stocks tend to be connected to more mature companies earning enough cash to return some to shareholders. At times, however, extreme market pressure can force them to cut their dividends, which hurts stock performance. In this month, the strategy also had more exposure to the Yield factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in financial services by 11.6 percentage points in terms of assets compared with the category average, and its industrials allocation is similar to the category. The sectors with low exposure compared with category peers are consumer cyclical and basic materials, underweight the average by 4.1 and 3.1 percentage points of assets, respectively. The portfolio is positioned across 63 holdings and is quite concentrated. In particular, 39.7% of the fund’s assets are housed within the top 10 holdings, compared to the typical peer's 27.6%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 18% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.