HDFC MF has launched MNC Fund NFO that would open for subscription on 17th February, 2023. This mutual fund scheme would invest majorly in MNC companies in India and in foreign assets. This sector has been an ever green sector 5 years back, however, lost its shine in the recent times. Should you invest in HDFC MNC Fund NFO? What are the various risk factors associated with such funds?
HDFC MNC Fund (NFO) – Issue details
Here are the NFO issue details.
|Scheme reopens for continuous purchase/sale||Within 5 working days|
|Minimum Lumpsum||Rs 100|
|Minimum SIP||Rs 500 for 6 months|
|NAV of the fund||Rs 10 during NFO period|
|Exit Load||1% if redeemed within 365 days|
|Risk||Very High Risk|
|Benchmark||NIFTY MNC TRI|
|Fund Manager||Mr. Rahul Baijal|
What is the investment objective of this MF scheme?
To provide long-term capital appreciation by investing predominantly in equity and equity related instruments of multinational companies (MNCs).
There is no assurance or guarantee that the investment objective of the scheme will be realized.
Where does the scheme invest?
Below is the allocation strategy of the fund.
|Type of instruments||Min %||Max %||Risk Profile|
|Equity and Equity related instruments of Multi National Companies (MNCs)||80%||100%||Very high|
|Equity and Equity related instruments of
companies other than above
|Units issued by REITs and InvITs||0%||10%||Very high|
|Debt, Money Market Securities and Fixed Income Derivatives||0%||20%||Low to Medium|
|Units of Mutual Fund||0%||20%||Low to High|
Performance of existing MNC Funds
Here is the performance of existing funds from this sector.
|Scheme Name||1 Yr||3 Yrs||5 Yrs||10 Yrs|
|UTI MNC Fund||1.3%||10.7%||8.0%||15.3%|
|Aditya Birla Sun Life MNC Fund||-2.5%||4.7%||5.0%||14.7%|
|ICICI Prudential MNC Fund||0.7%||23.0%||–||–|
Why to invest in HDFC MNC Fund NFO?
1) This fund invests in MNC companies that are operating in India and up to 20% in foreign assets. Investors who feel there is growth potential in such theme can invest in such fuds.
2) MNCs tend to be the least volatile, and thus less risky, compared to other thematic mutual funds because these companies are cash rich and can survive adverse times.
Risk factors in such funds
One should consider some of these risk factors / negative factors before investing.
1) Since this fund invests only in a one segment i.e. MNC category, this is classified as a thematic fund and hence is high risk.
2) One of the major risk associated is the economic and political risk, since these firms have a global presence, they need to consider the rules and regulations of different countries to adhere to.
3) There are a limited number of MNC companies for investment. Fund managers would not find much variation in the portfolio.
4) You can refer complete risk factors of investing in this scheme to SID / KIM / NFO prospectus.
HDFC MNC Fund NFO – Should you invest?
This mutual fund invests in MNC companies that are operating in India as well as foreign assets up to 20%. These funds tend to be less volatile and less risky as they invest in MNC companies which are cash rich.
On the other hand, this sector has been an evergreen segment till 5 years and lost shine in the recent times. While this segment of mutual funds has generated between 14% to 15% annualized returns in the last 10 years, however it generated 5% to 8% annualized returns in the last 5 years which is far below a simple FD return.
High risk investors who are okay with low returns, can invest in such funds for the medium to long term.
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