INVESTWITHPEACE

HDFC Mutual Fund

Opportunity in
DEBT Product suite
Upto 1 year investment horizon
March 2023
Investment Philosophy (Debt) INVESTWITHPEACE

HDFC Mutual Fund (HDFC MF) has acted conservatively on its fixed income investments, with
exposures taken after conducting adequate due diligence.

At HDFC MF we have consistently remained committed to our investment philosophy for fixed
income investments viz. Safety, Liquidity and Returns (SLR), generally prioritized in that order.

HDFC MF maintains risk control through conservative sizing of exposure based on proprietary
Credit Scoring Model which factors in – Parentage, Financials, Rating and Outlook.

HDFC MF’s conservative credit approach has enabled its schemes to tide over credit
issues in the past.

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Multi-faceted Credit Process INVESTWITHPEACE

Independent credit evaluation based on multiple factors.

Credit Execution
Group Proprietary Credit Score Model based sizing of exposure and
Reputation resultant diversification aims to add another layer of protection.
Covenants Sector
of debt Outlook Diversification and Sizing

Proprietary Factors view on Group,

Credit Scoring Model Relevant financial parameters,
Collateral Internal External
pledged to View on Credit Internal Rating and Outlook.
secure debt Rating
Credit
Scheme Exposure Function of credit score;
(% of AUM) weaker the score, lower the
internal investment limit of issuer.
Capacity to
pay and Business Cumulative Mutual Function of credit score,
Financial Moat
Flexibility Fund Exposure balance sheet size, diversity
Character of of liabilities, capital market
Management exposure etc.

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Results of Disciplined Credit Evaluation Process INVESTWITHPEACE

The approach toward credit investment has worked well and we have been able to avoid majority of stress cases experienced
by the mutual fund industry over the years. Even in instances of stress in which HDFC MF had exposure, we recovered major
portion of our investment due to adequate risk mitigating factors highlighted above.

MF Industry has experienced instances of credit stress* in nearly 21 companies / Groups.

18

Instances 12
of Stress
6

0
HDFC MF was not exposed to most Cases where HDFC MF had exposure, but Credit costs have been minimal for HDFC MF
such stressed cases recovered major portion of our investment due (Stressed exposures at ~0.77% of AUM of
to Covenants, good business/Collateral and affected schemes
percentage as on Feb 28, 2023)

No Exposure Past Exposure, but recovered Exposure, underresolution

Deccan Chronicle Group IL&FS SPVs (backed by NHAI annuity) Simplex Infrastructures$
Amtek Auto Limited IDBI Bank
Jindal Steel & Power - Group Jana Small Finance Bank
Ballarpur (BILT) Group Zee Promoter Group
Yes Bank Sadbhav Group
Religare Group
Vodafone Idea Ltd.
Sintex Group
IL&FS Group (other than SPVs)
$
Market Value of exposure Simplex Infrastructure at the time of credit stress was ~Rs. 134 cr. After the 50% haircut (as per SEBI guidelines)
Altico Capital the market value of the residual exposures was ~Rs. 65 cr or ~0.77% of total AUM of affected scheme as of Feb 28, 2023. *Stress is defined
Dewan Housing Group as companies whose ratings were eventually downgraded to BBB or below rating category during last decade.
Anil Ambani Group
Cox & Kings Ltd
Cafe Coffee Day Group
Shapoorji Pallonji Group
Future Group

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Outlook
INVESTWITHPEACE
The minutes of monetary policy released during the month were largely in line
with expectations. While the two dissenting members preferred to pause to
assess the impact of already done rate hikes, remaining 4 members felt the
need to hike rate considering the elevated core inflation and resilient economic
activity. By keeping the stance unchanged, RBI has retained the flexibility to
pause or hike further depending on data.
Over the past few months, the Indian 10Y Gsec yield has moved within a narrow
range despite significant volatility in global bond yields, rise in domestic policy
rates and external sector risks. Majority of these factors have started to ease
and consensus is that these are likely to continue moderating in the near term.
Moreover, there is increasing consensus that major central banks, including US
Fed and RBI, are nearing the peak of rate hiking cycle driven by significant
tightening in 2022 and softening inflation and growth outlook. Besides, the real
policy rate on 1 year forward average CPI forecast (by RBI of 5.3%) is ~120 bps.
The announced budgeted market borrowings for FY24 were in line with market
expectations and alleviated concerns on Gsec supply. All the aforesaid factors
are likely to bode well for the fixed income outlook.
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Outlook
INVESTWITHPEACE
Key risks to yields falling include elevated core CPI, resilient domestic
growth, robust credit demand and continued global monetary tightening.
Heightened geopolitical risks, elevated oil prices, tight liquidity and
increase in state development loans (SDLs) are also other important
factors which can keep the yields at elevated levels.
On an overall basis, in our view, yields are likely to trade in a range with a
downward bias. While we continue to recommend investments into short
to medium duration debt funds post FY24 budget and MPC meeting,
investors could consider higher allocation to longer duration funds in a
staggered manner, in line with individual risk appetite.

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Suitability of Debt Schemes in current scenario INVESTWITHPEACE

Fund Name Ideal Investment Horizon

HDFC Overnight Fund Up to 7 days

HDFC Liquid Fund 7 to 91 days
HDFC Ultra Short Term Fund 2 to 6 months
HDFC Money Market Fund 3 to 12 months
HDFC Low Duration Fund 3 to 12 months
HDFC Floating Rate Debt Fund 3 to 12 months

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HDFC Overnight Fund INVESTWITHPEACE

HDFC Overnight Fund

Aims to generate returns by investing in debt and money Portfolio Credit Composition (%)
market instruments with overnight maturity.
2

Investments under the Scheme would be made

predominantly in Tri-party Repos (TREPS), overnight Sovereign
reverse repos and fixed income securities/instruments
Cash, Cash Equivalents and Net
with overnight maturity. Current Assets

YTM of 6.60% as of 28th February 2023.

The scheme is ideal for parking surplus money pending 98

deployment or for meeting contingencies.

The scheme is ideal for an investment horizon up to Portfolio Statistics*

7 days. YTM in (%) 6.60
Average Maturity 2 days
Macaulay's Duration 2 days
*Portfolio Details as on February 28, 2023.
Past performance may or may not be sustained in future. For complete portfolio, please refer to our website www.hdfcfund.com
For further details on investment strategy, asset allocation and scheme facts refer Scheme Information Document / Key Information Memorandum.
In view of the individual circumstances and risk profile, each investor is advised to consult his / her professional advisor before making a decision to invest.

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HDFC Liquid Fund INVESTWITHPEACE

Focuses on generating income through a portfolio HDFC Liquid Fund

comprising money market and debt instruments. Portfolio Credit Composition (%)
0
The scheme aims to invest in debt and money market 5
instruments with residual maturity not exceeding 91 days.
24 Sovereign

High quality portfolio with ~99.9% exposure to AAA & AAA/AAA(SO)/A1+/A1+(SO)

& Equivalent
Equivalent.
Cash, Cash Equivalents and Net
Current Assets
YTM of 7.23% as of 28 February 2023.
th

AA+
The scheme is ideal for parking surplus money pending 70
deployment or for meeting contingencies.

The scheme is ideal for an investment horizon between Portfolio Statistics*

7 to 91 days.
YTM in (%) 7.23
Average Maturity 40 days
Macaulay's Duration 40 days

*Portfolio Details as on February 28, 2023.

Past performance may or may not be sustained in future. For complete portfolio, please refer to our website www.hdfcfund.com
For further details on investment strategy, asset allocation and scheme facts refer Scheme Information Document/ Key Information Memorandum.
In view of the individual circumstances and risk profile, each investor is advised to consult his / her professional advisor before making a decision to invest.

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HDFC Ultra Short Term Fund INVESTWITHPEACE

Aims to generate income/capital appreciation through HDFC Ultra Short Term Fund
investment in debt securities and money market Portfolio Credit Composition (%)
instruments.
5
The scheme invests in debt and money market instruments 20
such that Macaulay Duration of portfolio is between Sovereign
3-6 months. AAA/AAA(SO)/A1+/A1+(SO)
& Equivalent
High quality portfolio with ~100% exposure to AAA &
Cash, Cash Equivalents and Net
Equivalent. Current Assets

Attractive YTM of 7.61% as of 28th February 2023. 75

The scheme is ideal for investors desiring a high degree of

liquidity and lower interest rate risk with an investment
Portfolio Statistics*
horizon of 2-6 months.
YTM in (%) 7.61
Investors can also use the scheme as a channel to transfer Average Maturity 173 days
funds systematically to other schemes. Macaulay's Duration 172 days

*Portfolio Details as on February 28, 2023.

Past performance may or may not be sustained in future. For complete portfolio, please refer to our website www.hdfcfund.com
For further details on investment strategy, asset allocation and scheme facts refer Scheme Information Document / Key Information Memorandum.
In view of the individual circumstances and risk profile, each investor is advised to consult his / her professional advisor before making a decision to invest.

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HDFC Money Market Fund INVESTWITHPEACE

The Scheme invests in money market securities with a HDFC Money Market Fund
maturity of up to 1 year. Portfolio Credit Composition (%)
Aims to maintain a higher credit quality with a focus on 5
accruals. 21

Sovereign
The duration of the portfolio will be actively managed
based on the interest rate outlook of the Fund Manager. AAA/AAA(SO)/A1+/A1+(SO)
& Equivalent
High quality portfolio with ~100% exposure to AAA & Cash, Cash Equivalents and Net
Equivalent, as of 28th February 2023. Current Assets

75
The Scheme is ideal for investors desiring a high degree of
liquidity and lower interest rate risk with an investment
horizon of 3-12 months.
Portfolio Statistics*
Investors can also use the Scheme as a channel to transfer
funds systematically to other schemes. YTM in (%) 7.57
Average Maturity 171 days
Macaulay's Duration 171 days

*Portfolio Details as on February 28, 2023.

Past performance may or may not be sustained in future. For complete portfolio, please refer to our website www.hdfcfund.com
For further details on investment strategy, asset allocation and scheme facts refer Scheme Information Document / Key Information Memorandum.
In view of the individual circumstances and risk profile, each investor is advised to consult his / her professional advisor before making a decision to invest.

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HDFC Low Duration Fund INVESTWITHPEACE

HDFC Low Duration Fund is a low duration debt scheme HDFC Low Duration Fund
that focuses on investing in debt securities and money Portfolio Credit Composition (%)
market instruments such that the Macaulay Duration of the
portfolio is between 6 and 12 months.
6
10 19 Sovereign
Currently, the Scheme focuses on developing a
AAA/AAA(SO)/A1+/A1+(SO)
well-diversified portfolio of debt (including securitized debt) 5
& Equivalent
and other instruments that aims to generate returns
Cash, Cash Equivalents and Net
commensurate with low levels of interest rate risk. Current Assets
AA+
Better credit quality portfolio with ~84% exposure to AAA &
Equivalent. AA/AA-
60

Attractive current YTM of 7.91% offers good investment

opportunity.
Portfolio Statistics*
The scheme is ideal for investors with an investment YTM in (%) 7.91
horizon of 3-12 months. Average Maturity 2.64 Years
Macaulay's Duration 0.97 Year

*Portfolio Details as on February 28, 2023.

Past performance may or may not be sustained in future. For complete portfolio, please refer to our website www.hdfcfund.com
For further details on investment strategy, asset allocation and scheme facts refer Scheme Information Document/ Key Information Memorandum.
In view of the individual circumstances and risk profile, each investor is advised to consult his / her professional advisor before making a decision to invest.

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HDFC Floating Rate Debt Fund INVESTWITHPEACE

HDFC Floating Rate Debt Fund aims to generate HDFC Floating Rate Debt Fund
income/capital appreciation through investment in a Portfolio Credit Composition (%)
portfolio comprising substantially of floating rate debt,
fixed rate debt instruments swapped for floating rate 6
returns and money market instruments. There is no 6 Sovereign
assurance that the investment objective of the Scheme 8 32 AAA/AAA(SO)/A1+/A1+(SO)
will be realized. & Equivalent
Cash, Cash Equivalents and Net
Better credit quality portfolio with ~88% exposure to AAA Current Assets
& Equivalent.
AA+

Attractive current YTM of 7.92% offers good investment 47 AA/AA-

opportunity.

The scheme is ideal for investors with an investment

Portfolio Statistics*
horizon of 3-12 months.
YTM in (%) 7.92
Average Maturity 4.02 Years
Macaulay's Duration 1.03 Year

*Portfolio Details as on February 28, 2023.

Past performance may or may not be sustained in future. For complete portfolio, please refer to our website www.hdfcfund.com
For further details on investment strategy, asset allocation and scheme facts refer Scheme Information Document/ Key Information Memorandum.
In view of the individual circumstances and risk profile, each investor is advised to consult his / her professional advisor before making a decision to invest.

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PRODUCT LABELLING – Debt Schemes INVESTWITHPEACE
This product is suitable for investors who are seeking *
Name of Scheme
Riskometer # as on February 28, 2023 (current risk as per latest month end portfolio)

• regular income over short term that may be in line with the overnight call rates
• to generate returns by investing in debt and money market instruments with overnight maturity
HDFC Overnight Fund
Potential Risk Class (Maximum risk the Scheme can take)
An open ended debt scheme
investing in overnight securities. A Credit Risk Relatively Low Moderate Relatively High
Relatively Low Interest Rate Risk Interest Rate Risk (Class A) (Class B) (Class C)
and Relatively Low Credit Risk
Relatively Low (Class I) A-I
Moderate (Class II)
Relatively High (Class III)
Investors understand that their principal will be at A-I - A Scheme with Relatively Low Interest Rate Risk and Relatively Low Credit Risk.
low risk

• regular income over short term

• to generate income through a portfolio comprising money market and debt instruments

Potential Risk Class (Maximum risk the Scheme can take)

HDFC Liquid Fund
Credit Risk Relatively Low Moderate Relatively High
An open ended liquid scheme. A
Interest Rate Risk (Class A) (Class B) (Class C)
Relatively Low Interest Rate Risk
and Moderate Credit Risk Relatively Low (Class I) B-I
Moderate (Class II)
Relatively High (Class III)
Investors understand that their principal will be at B-I - A Scheme with Relatively Low Interest Rate Risk and Moderate Credit Risk.
moderate risk

*
Investors should consult their financial advisers, if in doubt about whether the product is suitable for them.
#
For latest riskometer, investors may refer to the Monthly Portfolios disclosed on the website of the Fund viz. www.hdfcfund.com 13
PRODUCT LABELLING – Debt Schemes INVESTWITHPEACE
This product is suitable for investors who are seeking *
Name of Scheme
Riskometer # as on February 28, 2023 (current risk as per latest month end portfolio)

• income over short term

• income/capital appreciation through investment in debt securities and money market instruments
HDFC Ultra Short Term Fund
An open ended ultra-short term
debt scheme investing in Potential Risk Class (Maximum risk the Scheme can take)
instruments such that the Credit Risk Relatively Low Moderate Relatively High
Macaulay Duration of the portfolio (Class A) (Class B) (Class C)
Interest Rate Risk
is between 3 months and 6
months. A Moderate Interest Rate Relatively Low (Class I)
Risk and Moderate Credit Risk Moderate (Class II) B-II
Relatively High (Class III)
Investors understand that their principal will be at B-II - A Scheme with Moderate Interest Rate Risk and Moderate Credit Risk.
low to moderate risk

• income over short term

• to generate income / capital appreciation through investment in debt securities and money market instruments
HDFC Low Duration Fund
An open ended low duration debt Potential Risk Class (Maximum risk the Scheme can take)
scheme investing in instruments
Credit Risk Relatively Low Moderate Relatively High
such that the Macaulay Duration
of the portfolio is between 6 Interest Rate Risk (Class A) (Class B) (Class C)
months and 12 months. A Relatively Low (Class I)
Relatively High Interest Rate Risk
and Moderate Credit Risk] Moderate (Class II)
Relatively High (Class III) B-III
Investors understand that their principal will be at B-III - A Scheme with Relatively High Interest Rate Risk and Moderate Credit Risk.
low to moderate risk

*
Investors should consult their financial advisers, if in doubt about whether the product is suitable for them.
#
For latest riskometer, investors may refer to the Monthly Portfolios disclosed on the website of the Fund viz. www.hdfcfund.com 14
PRODUCT LABELLING – Debt Schemes INVESTWITHPEACE
This product is suitable for investors who are seeking *
Name of Scheme
Riskometer # as on February 28, 2023 (current risk as per latest month end portfolio)

• income over short term

• to generate income / capital appreciation by investing in money market instruments

HDFC Money Market Fund Potential Risk Class (Maximum risk the Scheme can take)

An open ended debt scheme Credit Risk Relatively Low Moderate Relatively High
investing in money market Interest Rate Risk (Class A) (Class B) (Class C)
instruments. A Relatively Low
Interest Rate Risk and Moderate Relatively Low (Class I) B-I
Credit Risk Moderate (Class II)
Relatively High (Class III)
Investors understand that their principal will be at B-I - A Scheme with Relatively Low Interest Rate Risk and Moderate Credit Risk.
low to moderate risk
• income over short term
• to generate income / capital appreciation through investment in a portfolio comprising substantially of floating rate debt, fixed rate
HDFC Floating Rate Debt Fund debt instruments swapped for floating rate returns and money market instruments
An open ended debt scheme
predominantly investing in floating Potential Risk Class (Maximum risk the Scheme can take)
rate instruments (including fixed
Credit Risk Relatively Low Moderate Relatively High
rate instruments converted to
Interest Rate Risk (Class A) (Class B) (Class C)
floating rate exposures using
swaps / derivatives) A Relatively Relatively Low (Class I)
High Interest Rate Risk and
Moderate (Class II)
Moderate Credit Risk
Relatively High (Class III) B-III
Investors understand that their principal will be at B-III - A Scheme with Relatively High Interest Rate Risk and Moderate Credit Risk.
moderate risk
*
Investors should consult their financial advisers, if in doubt about whether the product is suitable for them.
#
For latest riskometer, investors may refer to the Monthly Portfolios disclosed on the website of the Fund viz. www.hdfcfund.com 15
This presentation dated 20th March, 2023 has been prepared by HDFC Asset Management Company Limited (HDFC AMC) based on internal data, publicly available information and other
sources believed to be reliable. The information contained in this document is for general purposes only. The current investment strategies are subject to change depending on market
conditions. The document is given in summary form and does not purport to be complete. The document does not have regard to specific investment objectives, financial situation and
the particular needs of any specific person who may receive this document. Past performance may or may not be sustained in future. HDFC MF/ AMC is not guaranteeing / assuring any
returns on investments in its Scheme(s). The information/ data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy.
The statements contained herein are based on our current views and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ
materially from those expressed or implied in such statements. Past performance may or may not be sustained in future. Neither HDFC AMC and HDFC Mutual Fund nor any person
connected with them, accepts any liability arising from the use of this document. The recipient(s) before acting on any information herein should make his/her/their own investigation and
seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED
DOCUMENTS CAREFULLY.