NFOs for You: HDFC Nifty LargeMidcap 250 Index Fund, LIC MF Manufacturing Fund, WhiteOak Capital Digital Bharat Fund in Spotlight

New fund offerings are gaining popularity, just like equity mutual funds. In August 2024, the mutual fund industry saw inflows of new fund offerings (NFOs) totalling Rs 13,815 crore, spread across 18 NFOs. This was a decline compared to the Rs 16,565 crore invested across 15 NFOs in July 2024. Out of the 18 NFOs launched in August 2024, 5 were thematic funds, of which 1 belongs to the large-cap category. Notably, thematic funds accounted for a significant 73.8% of the total NFO flows in August 2024.

Here are three more NFOs that emerged this week.

1. HDFC Nifty LargeMidcap 250 Index Fund

> HDFC Asset Management Company launched HDFC Nifty LargeMidcap 250 Index Fund on September 20, 2024 with a closing date of October 4, 2024. This new fund is intended to mirror the performance of the Nifty LargeMidcap 250 Total Returns Index.

> HDFC Nifty LargeMidcap 250 Index Fund offers a passive investment approach and is designed for investors looking for diversified exposure to large and mid-cap companies in a single fund.

> The fund offers diversified exposure by including stocks from both the Nifty 100 Index and the Nifty Midcap 150 Index, with an equal split between large-cap and mid-cap companies.

> To maintain a balanced portfolio, the allocation is adjusted quarterly, providing a 50:50 exposure to large and mid-cap companies. This strategy allows investors to benefit from the stability of established corporations while also tapping into the growth potential of smaller companies.

> Investors can deposit a minimum amount of Rs 100 during the NFO period. There is no upper limit for investment.

> The fund will be managed by Nirman Morakhia and Arun Agarwal.

> The fund will provide diversified exposure across sectors and market sizes by investing in 250 stocks. With one fund, investors can easily access large and mid-cap segments without having to manage multiple investments. Quarterly resets prevent rebalancing from triggering taxable events.

Navneet Munot, Managing Director and CEO, HDFC Asset Management Company, said, “With over two decades of experience in Index Solutions, we are pleased to introduce this fund. It provides a unique opportunity to be part of India’s growth story.”

2. WhiteOak Capital Digital Bharat Fund

WhiteOak Capital Digital Bharat Fund, launched by WhiteOak Capital Mutual Fund, is an open-ended equity fund that will invest primarily in technology and technology-related companies.

The primary objective of Digital Bharat Fund is to achieve long-term capital growth by investing primarily in equity and equity-related instruments in the technology sector. The fund aims to leverage the rapid advances in digital technology that are revolutionizing multiple sectors in India.

Fund allocation strategy:

The fund’s portfolio allocation strategy dictates the following percentages:

80%-100% will be allocated to equity and capital instruments of technology and technology-related companies.
0%–20% will be allocated to shares and instruments linked to shares of other companies.
0%–20% will be allocated to debt securities and money market instruments.
0%–10% will be allocated to units issued by REITs and InvITs.

Benchmark: Program performance will be measured against the BSE Teck TRI Index.

Management team:

The Digital Bharat Fund will be overseen by the following experts:
Ramesh Mantri (Equity)
Trupti Agarwal (Assistant Fund Manager, Equities)
Dheeresh Pathak (Assistant Fund Manager, Equities)
Piyush Baranwal (debt)

Investment recommendation:

Investors looking for long-term capital growth, especially in the technology sector, may consider this fund as a potential investment opportunity.

However, before making any investment decisions, you should carefully evaluate your risk tolerance and investment objectives.

3. LIC MF Production Fund

LIC Mutual Fund has launched LIC MF Manufacturing Fund, which is an open-ended equity scheme focused on the manufacturing sector. The NFO is open till October 4, 2024. The allotment of units is scheduled to take place on October 11, 2024.

The primary objective of the LIC MF Production Fund is to ensure long-term capital growth through strategic investing in equities and equity-related instruments of companies operating in the production sector.

The Fund will strategically focus on various industries in the manufacturing sector, such as automotive, pharmaceuticals, chemicals, heavy engineering, metals, shipbuilding and petroleum products.

Fund Allocation and Management Strategy of LIC MF Manufacturing Fund

The allocation strategy for the LIC MF Production Fund includes the following key aspects:

Equity Allocation: The Fund intends to invest 80-100% of its portfolio in equities and equity related instruments, primarily those related to manufacturing companies.

Diversification: A portion of funds from 0% to 20% will be invested in equities and equity-related instruments of companies outside the manufacturing sector, which will ensure portfolio diversification.
Fixed Income Securities: A portion of 0% to 20% will be allocated to debt securities and money market instruments to enhance stability and generate income.
REITs and InvITs: A strategic allocation of 0%-10% will be made to Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) to leverage the potential of these alternative assets.

The benchmark is based on the Nifty India Manufacturing Index. The performance of the LIC MF Manufacturing Fund will be measured against the Nifty India Manufacturing Index (Total Return Index), thereby providing investors with an appropriate benchmark to assess the fund’s performance in the context of the manufacturing sector in India.

The Indian economy is growing at a significant pace, driven by urbanization and various government initiatives to boost the manufacturing sector. One of the key programs driving this growth is the Production Linked Incentive (PLI), along with initiatives like Make in India and Atmanirbhar Bharat, which are strategically positioning India as a leading player in the global manufacturing landscape. Against this backdrop, LIC MF Manufacturing Fund has been designed to leverage these favorable conditions and capitalize on promising growth opportunities in the manufacturing sector.

RK Jha, Managing Director and CEO, LIC Mutual Fund, said, “India’s growing GDP, growing middle class population and export incentives are boosting demand for manufactured goods. Manufacturing will play a key role in making India a $5 trillion economy by 2027. This fund aims to capitalise on the positive outlook for the manufacturing sector.”