Home Finance Risk Analysis: SBI vs. HDFC Mutual Funds – Which is Safer?

Risk Analysis: SBI vs. HDFC Mutual Funds – Which is Safer?

by Tom
Mutual fund SIP & it’s lesser known facts

Mutual fund investing has the ability to create wealth, but it also entails risk. Investors often compare SBI Mutual Funds and HDFC Mutual Funds, two of the top companies in India, while selecting a fund firm. Both provide a wide variety of schemes, but in order to make wise investment choices, it is important to comprehend the underlying risk profiles of each. 

Examining Risk Factors in Detail

The following lists the main risk considerations to take into account while comparing SBI mutual fund and HDFC mutual funds: 

  • Style of Fund Management

renowned for taking a more cautious tack and emphasizing value investment and well-established businesses. While this approach often yields lower volatility than aggressive growth-oriented funds, it may also provide poorer returns.

provides a broader range of funds, including alternatives for both aggressive growth and value investing. Because of this flexibility, investors may choose a risk profile that complements their financial objectives. Aggressive funds, however, could be more volatile and have a larger chance of losing money.

  • History of Fund Performance

SBI funds have historically shown reduced risk and produced steady returns, although modest ones. They are thus a wise option for investors that value capital preservation above rapid development.

The track record of HDFC funds’ performance is more uneven. Certain funds have shown remarkable returns, but they also entail a greater degree of risk. Investors should thoroughly review the risk parameters and performance history of the particular fund.

  • Cost-to-Rate

Generally speaking, SBI funds have lower cost ratios than HDFC products. Given that cost ratios have a direct bearing on fund performance, investors will benefit from better net returns as a result.

Certain HDFC funds may have higher cost ratios because of their growth-oriented, actively managed strategies. 

Diversification of Risk: 

Offering a wide variety of funds across asset classes (equity, debt), industries (IT, FMCG, infrastructure), and market segments (large-cap, mid-cap, small-cap), SBI and HDFC are two of the leading financial institutions. Risk mitigation is greatly aided by diversification. Investors may diversify their risk and perhaps reduce losses by making investments across a variety of asset classes and market sectors. 

  • Horizon of Investment

Investment horizon and risk tolerance are often correlated. Low-risk SBI funds or debt-oriented choices provided by both firms may be more appropriate for investors with a short-term investment horizon (less than three years). On the other hand, investors who have a longer time horizon—five years or more—may be able to bear the increased risk involved with HDFC’s aggressive growth funds. 

The verdict is in: growth potential matters, but safety comes first. 

Which is “safer” now? It is contingent upon your own investing objectives and risk tolerance. 

  • Prioritizing safety 

SBI Mutual Funds provide a decent mix of reduced risk and steady, modest returns if capital preservation is your primary goal.

  • Potential for Growth

Aggressive growth funds with the potential for large returns are available via HDFC mutual fund, but they also come with a higher risk of loss and volatility. 

In summary 

Although risk analysis offers insightful information, other aspects should also be taken into account. Strong investing procedures and skilled fund management teams are features shared by SBI and HDFC. You may further hone your selection by examining a fund’s investing philosophy, historical performance in down markets, and compliance with risk management procedures.

In the end, a diverse portfolio that is customized to your unique situation is the “safest” choice. To attain your financial goals, think about speaking with a financial counsellor who can evaluate your risk tolerance and suggest a good combination of funds from SBI and HDFC, or other fund companies.

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