Bandhan Innovation Fund NFO – Issue Details and Review

Bandhan Mutual Funds has launched Innovation Fund NFO. The scheme brochure indicates that it aims to build portfolios for tomorrow’s opportunities. This fund is open now and closes on April 24, 2024 for initial subscription. Such mutual funds do not invest in specific index or sector or segment, however, follows an innovative theme. In this article, we would provide Bandhan Innovation Fund NFO issue details and whether you should invest or avoid.

Bandhan Innovation Fund – NFO issue details

This is an open-ended mutual fund equity scheme.

Fund Name Bandhan Innovation Fund
NFO Opens 10-Apr-24
NFO closes 24-Apr-24
Scheme reopens for continuous purchase/sale Within 5 working days
Minimum Application Amount Rs 1,000 and in multiples of Rs  1 thereafter
Minimum SIP Rs 100 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load 0.5% for redemption Within 30 days
Risk Very High Risk
Benchmark NIFTY 500 TRI
Fund Manager Manish Gunwani
Brijesh Shah

What is the investment objective of Bandhan Innovation Fund NFO?

The Scheme seeks to generate long-term capital appreciation by investing predominantly in equity and equity-related instruments of companies following innovation theme.

Bandhan Innovation Fund NFO Review - Issue Details

What is the allocation pattern in this mutual fund scheme?

Here is the allocation pattern of this scheme.

Type of instruments Min % Max % Risk Profile
Equity & equity related instruments following innovation theme
companies
80% 100% Very High
Equity & Equity related securities other than above and overseas securities* 0% 20% Very High
Debt Securities and Money Market Instruments (including Government securities, Securitised debt) 0% 20% Low to Moderate
Units issued by REITs & InvITs 0% 10% Very High

How is the performance of the innovation theme category of mutual funds?

Currently most of the innovation mutual fund schemes are launched in less than an year, hence we are providing performance for 3 months, 6 months and YTD.

Scheme Name 3M 6M YTD
ICICI Prudential Innovation Fund 11% 30% 13%
Union Innovation & Opportunities Fund 5% 15% 9%
Nippon India Innovation Fund 6% 20% 9%

Why to invest in the Bandhan Innovation Fund NFO?

Here are a few reasons to invest in this fund.

  • This fund invests in companies that have characteristics of innovative companies. As per product brochure these are companies that have high skilled employee cost, strong brand, high R&D expenses, differentiated product/service, potentially higher margins and into non-linear business model.
  • As per the data indicated in the product presentation, Innovation is expected to grow 3x in next 6 years, Innovation in retail is expected to grow 7x in 10 years and Innovation in banking and auto sectors might lead to significant growth.  Investors who want to encash such opportunities can invest in such funds.
  • Historically innovative companies have generated higher returns. As an example, Nasdaq reflects innovative companies that generated 35x returns Vs. S&P 500 of 14x returns in the last 34 years.

Why should you avoid Bandhan Innovation Fund NFO?

One should consider some of these risk factors / negative factors before investing.

  • The scheme invests majorly in equity instruments of companies engaged in or expected to benefit from innovation theme. It is possible that such innovation is short term and/or do not crystallize in a manner commensurate with expectations.
  • The scheme is thematic in nature, hence will be affected by the risks associated with the innovation theme. Owing to high concentration risk for thematic scheme, risk of capital loss is high.  There is an element of unpredictable market cycles that could run for extended periods
  • This fund invests up to 20% of its assets in foreign securities where there is geo-political risk and foreign currency exchange risk.
  • Investors should read all risk factors before investing in such schemes.

Should you invest in Bandhan Innovation Fund NFO?

Bandhan Innovation Fund follows innovation theme. This scheme would invest in companies based on leading innovators, rising innovators and emerging innovators.

On the other side, there is no guarantee that such innovation theme benefits such funds. Investors cannot assess how this category of funds would perform in the medium to long term.

If you are high risk investor and excited about investing in such innovation theme based mutual fund schemes, you can invest. Otherwise, one can avoid such funds.

Bandhan Innovation Fund NFO analysis is done based on SID and Product Brochure

One comment

  1. You have not mentioned anything about performance of bandhan in its previous mutual funds and about fund manager of this fund.

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