HDFC AMC launches innovation fund with thematic bet but higher risk

Open-ended equity scheme will invest in companies with 'innovative' products processes or business models

HDFC Asset Management Company (AMC) has launched an open-ended equity scheme that will invest in companies with “innovative” products processes or business models, it said on Tuesday.

 

HDFC Innovation Fund opens on June 27 and closes on July 11, 2025. The thematic fund will give investors “exposure to firms that are at the forefront of transformation, driven by digital adoption, startup energy, and government-backed innovation policies”, said HDFC AMC on Tuesday.

 

“With our research-driven approach, we aim to capture the long-term wealth creation potential of innovation-focused businesses,” said Navneet Munot, chief executive officer and managing director of HDFC AMC, about the new fund offer (NFO).

 

HDFC Innovation NFO’s key features

Fund type: Open-ended equity scheme following the innovation theme

 

Fund manager: Amit Sinha, senior equity analyst at HDFC AMC

 

Minimum investment: Rs 100 during NFO and the ongoing offer

 

Investment Focus: At least 80 per cent in equity and equity-related instruments

 

Benchmark Index: NIFTY 500 (Total Returns Index)

 

Exit load: 1 per cent if redeemed within one month; none thereafter

 

Approach: Bottom-up stock picking, diversified across sectors and market caps

 

The HDFC Innovation Fund will be available in two plans, Direct and Regular.  The Direct Plan is meant for investors who invest on their own and comes with lower costs, while the Regular Plan includes distributor commissions.  Each plan offers two options: Growth, where returns are reinvested to build wealth over time, and Income Distribution cum Capital Withdrawal (IDCW), which provides periodic payouts to investors seeking regular income.

   

Opportunities and risks

Opportunities:

 

1. Gain early exposure to India's innovation-led growth stories. 
2. Diversified play across sectors and market caps. 
3. Potential long-term capital appreciation through transformative businesses.

 

Risks:

 

• It may be more volatile than diversified equity funds. 
• Concentration in innovation-led sectors may underperform in certain market cycles. 
• Market timing risk during the NFO period could affect short-term returns.

 

Should you invest?

Innovation is undeniably a long-term structural trend in India, supported by government policies, a tech-driven startup environment, and digital acceleration. However, as with all equity investments, especially thematic ones, investors must align this with their risk appetite and investment horizon.

 

Those looking for long-term growth and comfortable with potential short-term volatility may find this fund a strategic addition to their portfolio. Conservative investors may prefer to wait and watch how the fund performs post-NFO.

 

Disclaimer: Mutual fund investments are subject to market risks. Read all scheme-related documents carefully before investing.