HDFC Mutual Fund launches HDFC Banking & Financial Services Fund

HDFC Mutual Fund is coming out with a NFO in the form of HDFC Banking and Financial Services Fund.

HDFC Banking and Financial Services Fund would be a thematic fund investing primarily in companies involved with the banking and financial services sector.

The fund would be open for subscription from June 11, 2021 to June 25, 2021.

NFO details for HDFC Banking and Financial Services Fund

Scheme Opens	11/06/2021
Scheme Closes	25/06/2021
Fund Manager	Mr. Anand Laddha Mr. Sankalp Baid
Benchmark	Nifty Financial Services (TRI)
Minimum Investment	5,000
Fund Category	Thematic
Exit Load	1% for remaining amount if redeemed within a year

HDFC Banking and Financial Services Fund would be an open – ended thematic fund investing in equity and equity related instruments of companies belonging to the banking and financial services sector.

HDFC Banking and Financial Services Fund Investment Objectives

The investment objective of the fund is to generate long term growth while investing in equity and equity related instruments of banking and financial services sector.

There is no guarantee that the investment objectives of the scheme would be achieved.

Additional reading: Click Here to read about the various types of mutual funds in India

HDFC Banking and Financial Services Fund Allocation

The asset allocation for the fund would be something like this

Asset Class	Minimum %	Maximum %
Equity and Equity Related instruments of banking and financial services sector	80	100
Other Equity and Equity related instruments	0	20
Non Convertible Preference shares	0	10
Debt and Money market instruments	0	20
Units issues by REITS and InvITs	0	10

The above figures are only indicative and not fixed, the fund managers have the liberty to move across the asset classes depending upon prevailing market conditions as long as they remain within the mandate permitted.

The fund can also invest in REITs and InvITs if so desired.

Thematic mutual funds

A Thematic Mutual Fund as the name suggests follows a particular theme when investing.

A Thematic Mutual Fund can invest across various sectors that fall within one particular theme.

It is far more diversified than a Sectoral Mutual Fund since it is not restricted to any one particular sector.

An infrastructure fund is an example of a thematic mutual fund, it invests only in stocks that are considered to be a part of the infrastructure story.

An infrastructure fund can invest in companies belonging to the paint (chemicals), cement, banks, etc sectors

Therefore, infrastructure is the theme in this example.

Additional reading: Click Here to read about thematic and sectoral mutual funds

Features of HDFC Banking & Financial Services Fund

The scheme can invest in IPOs of companies that could be classified as financial services companies.

The fund has the flexibility to invest up to 20% of its total equity allocation in companies besides those belonging to the financial services sector.

HDFC Banking and Financial Services Fund can also invest in other schemes of HDFC mutual fund as per regulations permitted by SEBI.

The fund can also invest in REITs and InvITs

HDFC Banking and Financial Services Fund Options

This hdfc mutual fund provides investors with the following two options

Growth: This option is most suited for investors who are not seeking dividends or who are not dependent on mutual fund dividends as a source of monthly income and would rather see their capital appreciate.

Income Distribution cum capital withdrawal: This option is most suited for investors who are seeking dividends or who are dependent on mutual fund dividends as a source of monthly income and are not looking for capital appreciation.

In case you do not opt for a particular option between growth and income distribution cum capital withdrawal option then the default option would be growth.

Who can invest in HDFC Banking and Financial Services Fund?

The following persons are eligible and may apply for Subscription to the Unit(s) of the Scheme:

Resident adult individuals either singly or jointly (not exceeding three) or on an Anyone or Survivor basis;

Minor (as the first and the sole holder only) through a natural guardian (i.e. father or mother, as the case may be) or a court appointed legal guardian. There shall not be any joint holding with minor investments;

Non-Resident Indians (NRIs) / Persons of Indian origin (PIOs) / Overseas Citizen of India (OCI) residing abroad on repatriation basis or on non-repatriation basis;

Such other category of person(s) permitted to make investments and as may be specified by the AMC / Trustee from time to time.

“Over last two decades, the financial services sector has grown faster than the rate of growth in gross domestic product. Despite this growth in the past, the penetration of various banking and financial services in Indian economy is low. The banking and financial services sector has demonstrated the ability to generate return over the market return when the economy is in growth phase." – Anant Laddha (Fund Manager)

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Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing