HDFC Regular Savings Fund, a new entrant into our Recommended Funds list of 2017 is being merged into HDFC Credit Risk Debt Fund (erstwhile HDFC Corporate Debt Opportunities Fund) with effect from May 8, 2018. An accrual fund with an average maturity between 1 to 3 years was positioned between a liquid fund and income fund. Investors who had a time horizon of 6 months to 1 year were advised to take an exposure into the same. A perusal of the portfolio for the last 3 years (April 2015 to March 2018) showed that the average maturity of the fund was 1.93 years. For the same period of analysis, it was observed that more than 70 percent of the surplus was parked into NCDs and the exposure into AA- and below instruments have been gradually reduced from 47 percent in April 2015 to 26 percent in March 2018.
The fund is now being merged into HDFC Credit Risk Debt Fund whose investment objective is to predominantly invest into AA and below rated corporate bonds (excluding AA+ rated corporate bonds). This means that the merged entity will be more aggressive as far as the credit exposure is concerned and the investment horizon for holding this fund should now be atleast 3 years. Hence, if the investor's risk profile and time horizon does not match with the above, then it is advisable to utilize the exit option and scout for other short term funds which are less aggressive and whose holding period can be 1 year.