HDFC Mutual Fund has launched Manufacturing Fund NFO. This mutual fund scheme primarily invests in manufacturing companies. Funds in this category have delivered annualized returns of 18% to 27% over the past five years.Should you invest? HDFC Manufacturing Fund NFO? What are the various risk factors associated with such funds?
HDFC Manufacturing Fund (NFO) – Issue Details.
HDFC Manufacturing Fund is an unrestricted equity scheme. Below are the details of NFO.
| Fund name | HDFC Manufacturing Fund |
| NFO is open | April 26, 24 |
| NFO closing | May 10, 24 |
| Scheme re-opened for continued purchase/sale | Within 5 business days |
| Minimum application amount | 100 rupees, thereafter multiples of 1 rupee |
| Minimum SIP | 100 rupees for 6 months |
| Fund NAV | 10 rupees during NFO period. |
| entry road | Nothing |
| End of loading | 1% on redemption within 30 days |
| danger | very high risk |
| standard | NIFTY India Manufacturing |
| fund manager | Rakesh Sethia |
What is the investment objective of this MF scheme?
We achieve long-term capital appreciation by investing in the stocks and stock-related securities of companies primarily engaged in manufacturing activities.
There is no guarantee that the scheme’s investment objectives will be realized.
What is the allocation pattern of this mutual fund?
The investment pattern of this fund is as follows.
| Type of instrument | minimum% | maximum% | risk profile |
|---|---|---|---|
| Themes for stocks and stock-related products of manufacturing companies | 80% | 100% | very expensive |
| Stocks and stock-related products Companies other than the above |
0% | 20% | very expensive |
| REIT and InvIT units | 0% | Ten% | Medium to high |
| Debt securities*, money market Commodities and bonds derivatives |
0% | 20% | low to medium |
| unit of investment trust | 0% | 20% | low to high |
Past performance of manufacturing investment trusts
There are very few existing funds that invest in manufacturing themes. Below is the performance of these funds. One-year earnings are annualized and data is current as of April 15, 2024 for him.
| scheme name | 6M | 1Y | 3Y | 5 years |
|---|---|---|---|---|
| Bank of India Manufacturing and Infrastructure Fund | 28% | 62% | 34% | 27% |
| ICICI Prudential Manufacturing Fund | 33% | 66% | 33% | twenty five% |
| Aditya Birla Sunlife Manufacturing Equity Fund | twenty four% | 51% | 20% | 18% |
| mass production manufacturing fund | 35% | – | – | – |
Why invest in HDFC Manufacturing Fund NFO?
The main reasons to invest in this fund are:
- With strong government support through production-linked incentive schemes and Make in India, manufacturing could become India’s next growth engine. Manufacturing GDP is expected to grow 2.8 times faster by 2030 compared to twice that of normal GDP.
- The fund offers investors the opportunity to participate in emerging sectors such as electric vehicles, electronics, battery technology and defence.
- Mutual funds in this theme have delivered annualized returns of 18% to 27% over the past five years.
Risk factors for such funds
You should consider some of these risk factors/negative factors before investing.
- They are called thematic mutual funds because they invest only in manufacturing companies. It is a high risk fund due to its concentration in a single segment.
- Until last year, this sector had underperformed compared to other equity funds.
- The full risk factors can be found in the Scheme Information Document (SID).
HDFC Manufacturing Fund NFO – Should you invest?
This fund invests in manufacturing industries. The risk is high because it only invests in one segment.
In one of our NFO reviews of manufacturing funds last year, we said that although the returns over that period were low, manufacturing in India has picked up in the last few years and such funds are good to hold for the long term. He pointed out that this could lead to good returns. Over 5 years. We will continue to proactively address these themes in the short to medium term.
High-risk investors who want to test new funds can invest in this NFO. Otherwise, you may want to consider some of the top manufacturing mutual funds that already have a proven track record.
Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
