HDFC Top 200 investing in HDFC Liquid

POSTED BY Anshuk Jain ON April 13, 2013 9:06 am COMMENTS (8)

Is this allowed? Won’t I end up paying both the expense ratios. I never signed up for a FoF.

Why can’t Prashanth Jain buy debt securities directly from the market? Why is he going through a sibling fund? One reason can be that he doesn’t have enough corpus to enter debt market by himself.. but he has invested 180 cr (1.57% of 12K crore) in it.

HDFC Liquid is a 3 star fund.. He could have picked up a better one.

8 replies on this article “HDFC Top 200 investing in HDFC Liquid”

  1. Ayush says:

    @Anshuk Jain I think as long as HDFC Top 200 is delivering a good performance in compare to its peers and the benchmark, it should not bother you much. I think FFC and Ashal are right about convenience and liquidity for the fund’s day to day operation. Live Mint has some good analysis about this fund. Here is the link, http://www.livemint.com/Money/dPlISx868hNgLYP5GvlWZL/HDFC-Top-200-lost-a-star-Should-you-worry.html

  2. Dear Anshuk, i’m trying to understand your query. The Eq. fund in question is HT200 & it’s debt investment are around 2.08% of it’s net assets. Now why it’s having such debt exposure in debt should be your first question? As per my understanding, the fund is managing a small part of it’s assets into Liquid fund to have liquidity open for day to day operation. You are well aware that liquid funds are good tool to park high amounts instead of routine long term debt funds is the duration is uncertain & liquidity is a high priority.

    Yes HT200 can invest in debt papers directly but for that again it needs money immediately in case of redemption which ‘ll not happen to it. Are you getting my point?

    Thanks

    Ashal

    1. Anshuk Jain says:

      Ashal,

      QLTEF have a much larger exposure to debt. And I am fine with that. Whether you park the money directly in the debt security market or in the liquid funds, it doesn’t matter in terms of liquidity for a 180 cr investment (it matters to us small investors, no doubt)

      Also I am trying to find any other fund who has done something like this. I am not able to find any. Look at ICICI Pru Discovery Reg-G.. it is directly buying debt securities instead of going through a liquid fund.. doesn’t that fund worry about liquidity?

  3. Anshuk Jain says:

    You are right. It is not a big enough slice to make me jump the ship, but I am perplexed by the fact the Mr. Jain went for a fund for debt holding.. Can’t he buy the securities directly from the market? this seems to be borderline nepotism..

    1. I wonder if it would have bothered you so much if he had purchased the same securities as the liquid fund directly, instead of investing in the fund.

      Nepotism? Maybe. Perhaps it is just plain couch potato convenience. Question is it really worth worrying about?

      I choose not to worry about issues which will probably not even remotely affect my portfolio.

      1. Anshuk Jain says:

        @FFC it wouldn’t have bothered me if he would have gone with the securities directly. You are right it is not a big slice to worry about.

        @Ashal QLTEF have a much larger exposure to debt. And I am fine with that. Whether you park the money directly in the debt security market or in the liquid funds, it doesn’t matter in terms of liquidity for a 180 cr investment (it matters to us small investors, no doubt)

  4. Can hardly call it a FoF. I don’t care about the reasons. 1.57% of MY HDFC Top 200 holding is a meager amt. I don’t mind that much invested in a liquid investment. I have learnt to look past star ratings. It is the quality of the underlying paper that counts. I save in Quantum liquid a 2* fund. I am pretty happy with it.

  5. Dear Anshuk, what’s your real query? Please elaborate more on it.

    thanks

    Ashal

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