HDFC Flexindex Plan Review & Analysis: Finance Trading Times

HDFC Flexindex Plan Review & Analysis

In this article, we will provide a review and analysis of the new offering from the HDFC Mutual Fund house, it is called the HDFC Flexindex Fund or HDFC Flexindex Plan.

What is so special about HDFC Flexindex Plan?
This HDFC Flexindex Plan offers the investors a facility to transfer investment money from a set group of HDFC managed select debt/liquid funds to a select group of equity schemes again managed by HDFC Mutual Fund, but based upon the desired level of investors trigger price. HDFC Flexindex


What is the Objective of HDFC FLEXINDEX PLAN
As mentioned in HDFC Flexindex Plan information site and advertisements,
• It helps investors to automatically transfer their investments from select debt / liquid schemes to select equity schemes of HDFC Mutual Fund at closing BSE SENSEX levels of their choice
• It thus facilitates an exposure to equities at targeted BSE SENSEX levels and helps to take advantage of market volatility

How does HDFC FLEXINDEX PLAN work?
• Investor puts money into select Debt / Liquid schemes of HDFC Mutual Fund
• Investor chooses four index levels or "trigger points"
• Money is transferred into select equity funds when specified index levels are reached or crossed
• In case "trigger points" are not achieved, balance amount (registered in select debt / liquid schemes) gets transferred into equity funds after 1 year in a phased manner

What are the investment options available for investing in HDFC Flexindex Plan?
There are two options:
1. Fixed Instalment Option.
Investment amount: Four equal installments (25% each). Transferred into the desired target scheme at specified SENSEX levels
2. Flexible Instalment Option.
Investment amount: Four variable installments (eg. 20%, 30%, 40%, 10% = 100%). Transferred into the desired target scheme at specified SENSEX levels.
In case all trigger options are not activated, the balance amount will be systematically transferred after 1 year from the date of registration into the target scheme. This will be done in six equal installments over 6 months

Advantages of HDFC FLEXINDEX PLAN
As claimed by HDFC Flexindex Plan brochures, they list the advantages as follows:

• It facilitates an exposure to equities at SENSEX levels of your choice; take advantage of market volatility
• It ensures that you invest at a targeted level and do not miss out on an opportunity; it enables automatic decision making at levels you are comfortable with
• Investments are into select equity schemes with long term track record
• Initial investment in liquid schemes help you to earn income till investments are switched to equity funds
• Take advantage of the market movements without the hassle of constant tracking

Related Competitor Product: ICICI Prudential Target Returns Fund Review & Analysis

What are the debt schemes which are available under this HDFC Flexindex Plan?
• HDFC Liquid Fund
• HDFC Liquid Fund – Premium Plan
• HDFC Cash Management Fund – Call Plan, Savings Plan and Treasury
Advantage Plan
• HDFC Floating Rate Income Fund - Short Term Plan
• HDFC Short Term Plan
• HDFC High Interest Fund – Short Term Plan

What are the Target Schemes available under the HDFC Flexindex Plan?
Equity Schemes
• HDFC Index Fund
• HDFC Premier Multi-Cap Fund
• HDFC Core & Satellite Fund
• HDFC Capital Builder Fund
• HDFC Top 200 Fund
• HDFC Equity Fund
• HDFC Growth Fund

Balanced Schemes
• HDFC Balanced Fund
• HDFC Prudence Fund

What are the risks in HDFC Flexindex Plan?
The problem is that everything is managed by HDFC Mutual fund managers. Hence, there is single dependency risk.
Also, I could not find any information about the fund switching charges and administrative costs associated with this scheme.
Since this scheme has a limited no. of source and target funds (again from HDFC), then there is a risk of these funds underperforming.
Then, what if your desired trigger level is not reached, there is a risk of the objective of this scheme to be missed completely
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1 Comment: Post your Comments

Think'in said...(on 10 May 2009 at 10:06 )  

tHANKS FOR THE INFO. IT WAS of a great help.Made easy to understand in short yet comprehensive mnner.

Wish you all happy and fruitful trading and investing activities with safety! = = = Post a Comment

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