Tata Housing Opportunities Fund NFO – Issue Details and Review

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?

Also Read: Midcap Fund that generated 28% returns in 1 year Vs Benchmark return 6%

Tata Housing Opportunities Fund NFO – Issue details

Tata Housing Opportunities Fund is an open-ended equity scheme investing in opportunities in housing segment.

Scheme Opens 16-Aug-22
Scheme Closes 29-Aug-22
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
Entry Load Nil
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)
Max TER 2.25%

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.

Tata Housing Opportunities Fund NFO – Issue Details and Review

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.

Also Read: Best Aggressive Hybrid Mutual Funds in 2022 (Upto 18% annualized returns in 5 years)

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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Suresh KP

One comment

  • Kamal Garg

    Sir,
    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.

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