HDFC Housing Opportunities Mutual Fund NFO – Should you invest?
To cap the opportunities of Govt of India initiative “housing for all by 2022”, HDFC AMC has come up with a new mutual fund scheme. HDFC Housing Opportunities Mutual Fund (NFO-New Fund Offer) Series 1 would open for subscription on 16th November, 2017. This fund would invest in housing sector and related business in India. What are the features of HDFC Housing Opportunities Fund New Fund Offer (NFO)? What is the investment strategy of HDFC Housing Opportunities Mutual Fund? What are the positives and risk factors in HDFC Housing Opportunities Fund NFO? Should you invest in such new fund Offers?
Also Read: Top Performing Mutual Funds to invest now in 2017-2018
What is Govt of India initiative “Housing for all by 2022”?
Govt of India has vision of “Housing for All by 2022”. It has targeted to build 5 Crore homes in 5 years through Pradhan Manthri Awaz Yojana Scheme. Govt of India is going to fund the projects under this scheme.
While construction companies would get benefitted, housing related companies would also get benefited with such initiaties. Govt of India is providing interest subsidiary under this scheme for low and middle income groups. It is also providing 100% tax benefits for real estate builders/developers. As per latest EPFO rules, they are providing upto 90% of the EPF amount for buying homes to boost the housing sector.
Features of HDFC Housing Opportunities Fund
To tap the opportunities in Housing sector with Govt of India initiative of “housing for all by 2022”, HDFC AMC is launching HDFC Housing Opportunities Mutual Fund Scheme.
1) HDFC Housing Opportunities Fund NFO Opens on 16th November, 2017.
2) This NFO Closes on 30th November, 2017.
3) This is close ended mutual fund scheme which would get matured at 1140 days. Means one cannot invest once the NFO closes. Investors cannot sell/redeem the fund (except for selling on stock exchanges if buyers are available).
4) There is no entry and exit load in this NFO.
5) This Mutual Fund invests in Housing companies and related business. It would invest in companies engaged in Steel, Cement, Paints and building material etc.,
6) Minimum amount to be invested is ₹ 5,000 and in multiples of ₹ 10 there-off. Since this is close ended scheme, there is no Systemetic Investment Plan (SIP) feature.
7) Fund manager is Mr.Srinivas Rao Ravuri.
8) Benchmark index is “India Housing and Allied Business India” on which the performance would be compared. This is a custom-made benchmark by IISL (part of NSE) called India Housing and Allied Businesses Index, a minimum 50 stock index that currently includes 14 basic industries.
Where are the objectives of HDFC Housing Opportunities Fund invest?
Here are the investment objectives of this fund.
1) This mutual fund scheme objective is to invest in companies that are engaged in housing in India that would benefit from affordable housing of Govt of India initiative.
2) This MF scheme would invest 80% to 85% in equities of housing and allied business.
3) This fund would invest 15% to 20% in debt and money market instruments.
4) To reduce downside of capital, it would also have invest / put option in derivatives.
Which are the sectors that would benefit from affordability of housing initiative?
Below are the sectors and underlying companies that are part of “India Housing and Allied Housing Business India” Index. This mutual fund scheme may not invest in all companies, however may pick and choose any company that has potential from this index list.
1) Construction sector – DLF, NBCC
2) Engineering – L&T Engineers India, Sadbhav
3) Cement – Ultratech Cement
4) Wooden Panels – Greenply, Century
5) Light Electricals – Havells, Crompton greaves
6) Steel – Tata Steel and SAIL
7) Adhensives and Chemicals – Akzo Nobel
8) Paints – Asian Paints, Nerolac and Berger
9) Sanitaryware – CERA and HSIL
10) Tiles – Kajaria
11) Home Loans – HDFC, HDFC Bank, ICICI Bank and SBI
12) Home Appliances – Voltas, Whirlpool and Symphony
Reasons to invest HDFC Housing Opportunities Mutual Fund
1) This fund would invest in opportunities arising through Govt of India initiative “housing for all by 2022”.
2) This fund aim is for capital appreciation by investing in housing opportunities in India.
3) Rising disposable income and lower interest rates to improve housing affordability and such MF schemes can benefit.
Reasons NOT to invest HDFC Housing Opportunities Fund
1) This is thematic / sector fund which invests in single sector which is high risk.
2) This scheme invests in equities of housing which are high risk. These are like high risk high return mutual fund schemes.
3) This is a close ended scheme with tenure of 1140 days i.e. 3 years and 45 days. One may or may not get good returns in 3 years equity fund scheme.
4) This fund tenure is 3 years and 45 days. You cannot sell your mutual fund unit. However these are listed on stock exchange and you can sell if buyers are available.
Also Read: Bharat 22 Exchange Traded Fund (ETF) NFO – Who can invest?
HDFC Housing Opportunities Mutual Fund – Should you invest?
HDFC Housing Opps Fund would invest in housing opportunities that would benefit from Govt of India “housing for all by 2022” initiative. There is no doubt that such initiatives would create enormous opportunities for investment. However, HDFC Opps Fund is close ended mutual fund which is just for 3 years. Mutual Fund schemes may or may not give good returns in 3 years. What happens if the equities in which such fund invests does not return good return in 3 years ? There is no way you can hold it for couple of more years. In such case you need to compromise with low returns. I would have been excited to invest in such funds if they are “open ended” or have atleast 4-5 years tenure. Investors should go through such negative points before investing in such thematic /sector mutual fund schemes.
If you enjoyed this article, share it with your friends and colleagues through Face book and Twitter.
Suresh
HDFC Housing Opportunities Mutual Fund NFO
- 10 Mutual Funds That Dropped 20-22% in 6 Months – Should You Buy or Avoid? - February 15, 2025
- Top 7 Flexi Cap Mutual Funds – How ₹1 Lakh Became ₹2.5-3.8 Lakhs in 5 Years! - February 14, 2025
- PPF Withdrawals – Investment Options for Indian Retirees - February 14, 2025
Discover more from Myinvestmentideas.com
Subscribe to get the latest posts sent to your email.
HDFC HOUSING OPPORTUNITY FUND ARE TAX SAVER 8C
Please suggest good investment options for senior citizens.
Very well convered all the aspect of the NFO. Good work and balanced view.
Thanks for information.
So do you recommend investing in the Scheme…
Thank you for the detailed explaination. Keep up the good work.
i dont understand why people goes for NFO . There lots of other MF available. NFO have no track and performance record.
Great inputs. Thanks
Thank you Ranga
Features of the scheme…. nicely explained
I already have folio available in HDFC MF online. I'm not able to search this fund online. Can anybody mentione the exact procedure to invest in this fund through online ?
This article was helpful in deciding whether to invest in this fund .i could see both its merits and demerits aut one glance. Thanks
Thank you Syrve
so what it means?
can i invest 5000/-and after multiple of 10000/-?
What is futer possibilities for this type of fund, as intially govt have a trend to invest in this market for next 5 years.
Can I invest monthly sip of Rs.500/- in HDFC HOUSING OPPORTUNITIES MUTUAL FUND scheme.
SIPs are not allowed in this fund since this is the closed ended scheme.
Thanks
No ur not done by sip its only a lum sum investment or it said that one tym investment
No. This is a close ended mutual fund. So SIP options are not available.
Invest lumosome amount and wait for 1140 days.
This is closed end fund locked for 3 years & 45 days so SIP Naturally not possible
yes its a great pleasure to get this info
Some information on whether the underlying stocks are currently overpriced would be helpful in evaluating whether the fund would be buying those stocks at the right time.
Dear Suresh,
Very enlightening review. Definitely, short duration period of 3 years is negative.
Thanks,
Seby
I don't understand why such marquee fund houses like HDFC should come out with a "close-ended" fund scheme. If it feels that there is a great opportunity to exploit in this housing/construction boom in line with GoI stated policy, then, either the fund should have been an "open-ended" one or it should have been of a minimum period of 5 years coinciding with the GoI stated policy tenure of ending with 2022.
Good article Suresh. Maybe one point you may want to consider adding to the positives is that fund is under the umbrella of HDFC which has been a pioneer in this sector and very successful.
Thanks Pankaj