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Introduction

HDFC Mutual Fund has launched the HDFC Diversified Equity All Cap Active Fund of Fund (FOF), an open-ended scheme that seeks to offer diversified equity exposure across all market capitalizations. It is designed for investors looking for long-term equity growth, with professional management and exposure via underlying equity-oriented schemes rather than direct stock picks.

Key Facts & NFO Details

Investment Objective & Strategy

• Objective: To seek long-term capital appreciation (and/or income) by investing in units of domestic equity-oriented schemes covering a mix of large-cap, mid-cap, and small-cap schemes.
• Allocation Strategy: The fund will dynamically allocate among underlying equity schemes of varying market caps, depending on economic and market outlook. It does not directly pick stocks, but achieves diversification via underlying mutual funds.
• Liquidity & Other Instruments: As a FOF, all investments are in equity schemes; if needed for liquidity, some exposure to cash or cash equivalents might be implied via underlying funds. The scheme does not indicate direct exposure to debt or gold (unless underlying schemes hold them, but its core is equity-oriented schemes)

Suitability & Who Might Benefit

This scheme may be suitable for investors who:

• Want exposure across large, mid, and small caps without picking multiple funds themselves.
• Have long-term horizon (say 3-5 years or more), so that market fluctuations even in small/mid cap segments can be managed.
• Have a high risk tolerance, as all-cap equity schemes tend to be volatile.

It may be less suitable for:

• Investors with low risk appetite or seeking stable income.
• Those needing short-term liquidity (exit load of 1% within 1 year).
• Investors preferring debt or balanced offerings rather than full equity exposure.

Key Risks & What to Keep in Mind

• Market risk: Equity-oriented schemes are influenced by broader market movements; small/mid caps can be more volatile.
• Fund-of-Fund cost drag: You’ll bear both the scheme’s expenses and the expenses of underlying equity funds. Total expense ratio (TER) may be higher.
• Concentration risk: Depending on the underlying schemes’ portfolios, there may be overlaps or concentrated exposure in certain sectors or stocks.
• Managerial risk: Performance depends on the fund managers’ ability to pick underlying schemes and manage allocations.
• Liquidity & exit cost: With exit load applicable for 1 year, redeeming early can lead to cost.

Disclosures & Important Notes

• The Riskometer for this scheme is “Very High.” This must be presented in all promotional or information materials.
• Statement that there is no assurance the investment objective will be achieved.
• Expense details and load structure should be clearly disclosed.
• Minimum subscription, entry / exit load, benchmark, and fund managers’ details must be present.
• As an AMFI-registered distributor, you must include your ARN, standard disclaimers (e.g. “past performance is not guarantee of future returns”), and avoid making any assured claims.

Pros vs. Cons

Final Thoughts

If you are looking for exposure to a broad equity basket (from large to small companies), want the ease of investing via a single scheme, and are willing to stay invested for at least a year (preferably longer), this fund could serve your equity growth objectives. But ensure the cost structure, risk tolerance, and your overall portfolio’s diversification make sense.

Before investing, go through the Scheme Information Document (SID) and Key Information Memorandum (KIM). If in doubt, consult your financial advisor to see whether this scheme fits your financial goals, tax situation, and risk profile.

RksWealth India Pvt.Ltd.
AMFI Registered Mutual Fund Distributor

Mutual-fund investments are subject to market risks. Read all scheme documents carefully before investing.