HDFC Capital Builder Fund - Growth Option, A Top SWP Fund With excellent past-1-Year Performance

HDFC Capital Builder Fund - Growth Option, A Top SWP Fund With excellent past-1-Year Performance

Feb 28, 2018

In a lot of mutual funds, the provision of SWP or Systematic Withdrawal Plan is offered. Under this plan, a fixed income reaches the bank account of the investor every month.

Through the SWP route, a fixed income can be earned, which gets deposited in the bank account on a fixed date just as people receive salary. All you have to do for this is, make investment of a lump sum amount in a scheme, and opt for the SWP provision under it to receive monthly income from the investment. Interestingly, even the remaining amount of the invested lump sum can be withdrawn at any time by submitting a “redemption instruction.” Why is this redemption possible? Because SWP belongs to the open-ended category. Note here that SWP instruction can be changed as well as stopped. That means you may terminate this facility as and when you want. Also, if you feel that the fixed amount you have been receiving ever since the you started investing, doesn’t meet your financial needs now, then you can increase the SWP amount. So, the provision is pretty flexible and its management is easy.

Another important benefit of SWP is its tax efficiency. Although the SWP provision is available across a range of schemes, investors should decide on whether or not to opt for it based on their risk appetite.

This is an extremely good facility for retiring employees, as they can use their retirement corpus to generate a steady stream of income through the SWP provision, similar to monthly salary, which they can receive even after retirement.

Although there are many SWP funds in the market, the one that has been a top performer for the past one year is HDFC Capital Builder Fund – Growth Option. The primary objective of the scheme is to ensure capital appreciation over the long-term horizon. The corpus remains parked mainly in equities and equity-linked instruments. The minimum investment amount for the fund is INR 5000.

To gauge the performance of the scheme, let’s have look at its performance table below:

Source: Swaraj Wealth Research

In the first year of the scheme’s advent, it offered a return of 41.57%, against a return of 35.66% offered by other comparable funds in the market, and a CNX 500 benchmark return of 34.49%. In the third year of the advent of the scheme, it gave a return of 15.03%, which was higher than the 12.69% return offered by other similar diversified equity funds in the market, and the benchmark of 11.11%. In the fifth year of the scheme’s launch, it marked a return of 20.57%, whereas the return offered by other comparable funds in the market stood at 17.01%. The benchmark that year was 14.34%. In the tenth year, the scheme gave a return of 10.77%. But the market average, that year, stood at 8.65% and the benchmark recorded was 5.65%.

Now, also have a look at the rolling returns the scheme offered. The rolling returns have mostly been positive for this scheme. During the period- January 02, 2017 to January 02,2018, the rolling return registered was 41.16% as opposed to 34.86% marked by other diversified equity funds in the market.

Source: Swaraj Wealth Research

From all the statistical highlights, we come to the conclusion that the scheme in question i.e. HDFC Capital Builder Fund – Growth Option is indeed worth making the investment in. But its suitability to your financial needs and goals should be well confirmed. For this, you can seek professional assistance from a financial advisor.

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