Another sectoral offering: HDFC MF launches Nifty Realty Index Fund

Sectoral funds carry higher risk, thus one could take controlled exposure to such funds

Among a series of thematic launches, HDFC Mutual Fund has also joined the bandwagon and launched a Nifty Realty Index Fund. The New Fund Offering ( NF0) opens on 7 March and closes on 21 March 2024. 

The Nifty Realty Index is designed to reflect the performance of real estate companies that are primarily engaged into construction of residential and commercial properties.

In February, the realty sector maintained its upward trajectory and surged by 6.3 per cent, leading as the top performer. The realty index is up 131.57 per cent in the last one year and 63 per cent in the last six months. In the last three months alone, the real estate index is up 27.6 per cent. 

HDFC NIFTY Realty Index Fund offers investors exposure to a diversified portfolio of real estate stocks through a single instrument, eliminating the need for individual stock selection. It is an open-ended scheme that aims to replicate the NIFTY Realty Index. The fund could be suitable for investors who seek diversified exposure to the growth potential of the realty sector and have high volatility tolerance. 
 

Why invest in the HDFC NIFTY Realty Index Fund?

As per HDFC Mutual Fund, 

1. The Realty sector is recovering after a decade-long period of consolidation
2. Rising per capita incomes, improving affordability, increased urbanization, government initiatives and RERA^ can drive growth for years to come
3. Listed Realty companies are poised to benefit from the above tailwinds.
4. Investors can get exposure to the Real Estate sector through the passively managed HDFC NIFTY Realty Index Fund
5. Companies have strengthened their balance sheets and improved their profitability metrics over the last 6-7 years.
6. There is room to additionally benefit from the continued premiumization and formalization of the sector

Snapshot of NIFTY Realty Index

1. Captures the performance of the real estate companies. Currently has 10 constituents
2. Stocks capped at 33% each, top 3 stocks capped at 62% in aggregate
3. Index is re-balanced on a semi-annual basis in March and September

NIFTY Realty TRI, NIFTY 500 TRI and NIFTY 50 TRI – Performance since inception

 Nirman Morakhia and Arun Agarwal are the fund managers of the scheme.

Point to note: In FY23, home sales of India’s residential property market reached an all-time high of Rs. 3.47 lakh crore, a 48% YoY increase

Thematic or sectoral funds are the flavour of the season, especially for retail investors. This particular category of mutual fund has received maximum inflows in the last one year or so. According to Association of Mutual Funds in India (Amfi) data, in February 2024 too, thematic funds garnered the highest inflows as compared to all other categories of equity funds by retail investors.The net inflows in thematic funds has jumped almost three times to Rs 11,262.72 crore in February 2024 from Rs 3,855.90 crore in year ago month.

 The category was aided by the launch of five new schemes during the month (Groww Banking & Financial Services Fund; quant PSU Fund; SBI Energy Opportunities Fund; WhiteOak Capital Banking & Financial Services Fund; WhiteOak Capital Pharma and Health.