Tata MF has launched Housing Opportunities Fund (new fund offer). This NFO would open for subscription on 16th August, 2022. This fund invests various stocks that can benefit from the growth of the housing theme. Such thematic funds invest only in specific themes and are high risk. Should you invest in Tata Housing Opportunities Fund NFO? What are the various risk factors associated with such funds?
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Tata Housing Opportunities Fund NFO – Issue details
Tata Housing Opportunities Fund is an open-ended equity scheme investing in opportunities in housing segment.
|Scheme reopens for continuous purchase/sale||09-Sep-22|
|Minimum Lumpsum||Rs 5,000|
|Minimum SIP||Rs 500 for 12 months|
|NAV of the fund||Rs 10 during NFO period|
|Exit Load||Within 1 year – Beyond 12% redemption – 1%
After 1 year – Nil
|Risk||Very High Risk|
|Benchmark||NIFTY Housing Index (TRI)|
|Fund Manager||Tejas Gutka (Equity Portfolio)
Venkat Samala (Overseas Investment)
Murthy Nagarajan (Debt Portfolio)
Tata Housing Opportunities Fund SID
What is the investment objective of this MF scheme?
To generate long-term capital appreciation by investing predominantly in equity and equity related instruments of entities engaged in and/or expected to benefit from the growth in housing theme.
There is no assurance or guarantee that the investment objective of the scheme will be realized.
What is the allocation pattern in this mutual fund?
This fund invests pattern is as follows:
|Type of instruments||Min %||Max %||Risk Profile|
|Equity and equity related instruments of entities engaged in activities of Housing theme||80%||100%||High|
|Other Equity & Equity related Instruments including units of mutual fund||0%||20%||Medium to High|
|Debt and Money Market Securities including units of mutual fund||0%||20%||Low to Medium|
|Units issued by REITs and InvITs||0%||10%||Medium to High|
Why to invest in Tata Housing Opportunities Fund NFO?
This fund invests in stocks that might get benefitted with the growing housing theme.
Tata Housing Opportunities Fund NFO – Risk and Negative Factors
One should consider some of these risk factors / negative factors before investing.
1) This fund invests in stocks of housing theme. Such funds are classified as thematic mutual funds and are considered as high risk.
2) Housing Opportunities theme might provide low returns. Check what happened to the HDFC Housing Opportunities Fund that floated 5 years back. This is a close ended fund launched in 2017 with a 3 year lock period. Investors lost money and they have been asked to extend beyond 3 year time frame with negative returns or exit with a loss.
3) It invests in foreign securities, ADRs/GDRs and Overseas ETFs. Investing in foreign assets has currency risk and geopolitical risks.
4) This fund invests in debt instruments where there are interest rate risks, liquidity risks and default risks.
5) It also invests in REITs and InvITs which are high risk.
6) You can refer complete risk factors of investing in this scheme in SID.
Historical Performance of Housing Opportunities Funds
Currently there are only 2 mutual funds that invests based on housing opportunities theme.
1) HDFC Housing Opps Fund – Launched in Dec-2017
Annualized returns since inception – 6.7%
1 year returns – 4.7% (till 2 weeks back, it was generating zero returns)
3 year annualized returns – 13%
Dec-17 to Dec-20 – It generated zero returns
2) ICICI Pru Housing Opportunities Fund – Launched in Apr-22
This fund generated 4.4% returns since launch.
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Tata Housing Opportunities Fund NFO – Should you invest?
Tata Housing Opportunities Fund invests in companies that would benefit from the opportunities arising in housing theme. This theme has been underperforming in the last 5-7 years. I don’t think anything dramatically would change in coming years. Such funds can provide nominal returns in next few years. Investors should consider all these factors before investing in such NFO’s.
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I actually fail to understand that most of the housing opportunities fund including a marquee fund house like HDFC has failed to deliver reasonable or even market-aligned returns. Similarly most of the REIT funds in India have also not delivered spectacular returns. What may be root cause of these performance.