May 2024 has been a remarkable month for equity mutual funds, witnessing the highest-ever monthly inflows on record. The surge was driven by sector and thematic funds, which saw net inflows of ₹19,213 crore.
A substantial portion of this was attributed to the new fund offering (NFO) of the HDFC Manufacturing Fund, which alone attracted ₹9,563 crore. This means that over 27% of the total equity inflows in mutual funds was driven by a single NFO.
The total net equity inflow for May amounted to ₹34,670.9 crore. This development raises the question: Should you consider investing in the HDFC Manufacturing Fund now?
Sector/thematic funds shine
If we look at overall thematic funds, the category has gained traction among investors due to favorable market conditions and strong sector performance.
The HDFC Manufacturing Fund, launched amidst this trend, stands out by mobilising the highest corpus by an actively managed equity mutual fund NFO in the past three years.
Financial planners attribute the fund's success to the increased investor interest in the manufacturing sector, spurred by the government’s focus on industrial growth.
A mixed bag of opportunities and risks
Sector and thematic funds, such as the HDFC Manufacturing Fund, offer high-return potential but come with increased risks.
"Investors need to be adept at tracking sector dynamics and timing their investments. Without the necessary skills or advice, these high-risk propositions could lead to significant losses," he said.
Fund performance and holdings
The HDFC Manufacturing Fund - Regular Plan, being only a few months old, has already delivered a 4.55% return since its inception.
HDFC Manufacturing Fund - Regular (G) portfolio includes holdings in prominent companies such as:
(Source: ICICI Direct)
Investment considerations
While the HDFC Manufacturing Fund’s initial performance and inflows indicate strong market confidence, investors should consider several factors:
Market timing: The manufacturing sector is cyclical. Entering at the right time is crucial for maximising returns.
Sector knowledge: Understanding the manufacturing sector’s nuances can help in making informed decisions.
Risk tolerance: Assess the ability to withstand potential volatility in sector-specific investments.
A substantial portion of this was attributed to the new fund offering (NFO) of the HDFC Manufacturing Fund, which alone attracted ₹9,563 crore. This means that over 27% of the total equity inflows in mutual funds was driven by a single NFO.
The total net equity inflow for May amounted to ₹34,670.9 crore. This development raises the question: Should you consider investing in the HDFC Manufacturing Fund now?
Sector/thematic funds shine
If we look at overall thematic funds, the category has gained traction among investors due to favorable market conditions and strong sector performance.
The HDFC Manufacturing Fund, launched amidst this trend, stands out by mobilising the highest corpus by an actively managed equity mutual fund NFO in the past three years.
Financial planners attribute the fund's success to the increased investor interest in the manufacturing sector, spurred by the government’s focus on industrial growth.
A mixed bag of opportunities and risks
Sector and thematic funds, such as the HDFC Manufacturing Fund, offer high-return potential but come with increased risks.
According to Himanshu Srivastava, Associate Director at Morningstar Investment Research India, these funds are cyclical and require careful monitoring.
"Investors need to be adept at tracking sector dynamics and timing their investments. Without the necessary skills or advice, these high-risk propositions could lead to significant losses," he said.
Fund performance and holdings
The HDFC Manufacturing Fund - Regular Plan, being only a few months old, has already delivered a 4.55% return since its inception.
HDFC Manufacturing Fund - Regular (G) portfolio includes holdings in prominent companies such as:
| Company Name | Invested Amount (₹ Cr) | % Portfolio Weight |
| Cipla | 304.52 | 2.94% |
| Reliance Industries | 435.48 | 4.21% |
| Tata Motors | 474.42 | 4.59% |
| Larsen & Toubro | 373.35 | 3.61% |
| Mahindra & Mahindra | 614.98 | 5.94% |
| Sun Pharmaceuticals | 489.57 | 4.73% |
| Bharat Electronics | 318.82 | 3.08% |
| Maruti Suzuki | 506.72 | 4.90% |
| Hindustan Aeronautics | 325.58 | 3.15% |
| Reverse Repo-TREPS | 1,522.60 | 14.72% |
(Source: ICICI Direct)
Investment considerations
While the HDFC Manufacturing Fund’s initial performance and inflows indicate strong market confidence, investors should consider several factors:
Market timing: The manufacturing sector is cyclical. Entering at the right time is crucial for maximising returns.
Sector knowledge: Understanding the manufacturing sector’s nuances can help in making informed decisions.
Risk tolerance: Assess the ability to withstand potential volatility in sector-specific investments.
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