Mutual Funds plan schemes to cash in on housing for all mission

New scheme would deploy at least 70 per cent in equity and equity-related instruments in housing

Mutual fund houses plan to come up with special schemes focused on the housing sector that is expecting a big boost from the Centre's 'Housing for All by 2022' mission.

HDFC Mutual Fund (MF), which has filed offer documents with markets regulator Sebi, plans to launch a close-ended thematic equity scheme 'HDFC Housing Opportunities Fund'.

Apart from this, a number of fund houses are expected to come up with new schemes that will invest in housing companies, industry experts said.

The new scheme would deploy at least 70 per cent of its corpus in equity and equity-related instruments of entities in housing and its allied business activities. Besides, it can invest up to 30 per cent of its assets in shares of entities other than housing and its allied business.

Also, it has the provision for investment in debt and money market instruments as well as REITs (Real Estate Investment Trusts) and InVITs (Infrastructure Investment Trusts).

Sebi, in January, had allowed mutual funds to invest in REITs and InVITs as part of its efforts to make real estate and infrastructure investments trusts attractive for investors.

"Mutual Fund managers have had limited exposure to real estate developers for many years now. But have been adding significant positions to allied industries such as housing finance companies, cement and certain niche plays like ceramics and tiles.

"With the government's recent focus on affordable housing, there can be an interesting play on housing and allied industries. Funds focusing on specific sectors and themes tend to be more volatile," Kaustubh Belapurkar, Director of Fund Research at Morningstar Investment Adviser said.

Besides, RERA (Real Estate Regulatory Act) will be another factor that will drive growth in the real estate sector that was battered for many years.

The government, in June 2015, had launched its ambitious 'Housing for All by 2022' scheme, paving the way for affordable homes for the urban poor and slum dwellers at low interest rates.