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HDFC Nifty Realty Index Fund limits new investments
(17:06, 02 Apr 2024)
Investors looking to put fresh money into HDFC Mutual Fund's recently launched HDFC Nifty Realty Index Fund will face limitations starting 8th April 2024.

The fund, launched in March as India's first offering focused solely on the domestic real estate sector, accepted investments between March 7th and 21st. It is an open ended scheme replicating Nifty Realty Index (TRI). It reopened for ongoing transactions on April 2nd.

However, the fund house on April 1st announced changes to investment options for the scheme, aiming to manage inflows. Here's what's changing:

* Lump Sum Investments on Hold: New lump sum investments, including additional purchases and switches into the fund, will no longer be accepted.

* SIPs Capped: Investors can still invest through Systematic Investment Plans (SIPs), but new registrations and top-ups will be restricted to monthly transactions with a maximum investment of Rs 1 lakh per investor per PAN card. Existing SIPs will continue uninterrupted.

Existing Transactions Unaffected:

For existing investors, redemptions, switch-outs, registrations for Systematic Withdrawal Plans (SWPs), and STP-outs from the scheme remain unaffected.

Possible Reasons for the Move:

While the official announcement does not disclose the specific rationale, market analysts believe it might be linked to the recent sharp rise in the Nifty Realty Index. The index has witnessed a 145% increase over the past year, prompting HDFC MF to take a cautious approach and manage inflows into the fund.

Investor Caution Advised:

The HDFC Nifty Realty Index Fund is a thematic fund, concentrating investments in the real estate sector. This inherently carries greater risk compared to diversified equity funds.

The Competition Heats Up

Despite HDFC MF's temporary pause, the real estate sector continues to attract interest from fund houses. Motilal Oswal Nifty Realty ETF launched in mid-March, and Tata Nifty Realty Index Fund is scheduled to open for new investments later this month.

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