Investors upbeat on realty may consider ICICI Pru's new fund

Mumbai: Savvy investors looking to bet on the housing and real estate theme after a long time-correction can consider a small allocation to the new fund offer of ICICI Prudential Housing Opportunities Fund. Since it is important to time entry and exit into thematic bets to generate alpha, financial planners believe first-time investors should stay away.

The new fund offer of ICICI Prudential Housing Opportunities Fund is currently open and closes on April 11. Investors can start with a minimum amount of ₹5,000, and for redemptions within a month, an exit load of 1% is applicable. The fund will be managed by Sankaran Naren and Anand Sharma, and will be benchmarked against the Nifty Housing Index.

"The housing sector in a country like India is bound to do well over the medium term due to favourable demographics, rising middle-class population, increased urbanisation, better affordability and reasonable interest rates," said Deepak Jasani, head of retail research, HDFC Securities. He believes over a five-year period, there is a good chance that this fund will outperform the Nifty.


Analysts believe that oversupply in the real estate space is over, and with muted gains from lands and buildings since 2013 leading to time correction of physical assets, the segment is attractively valued. The oversupply of 2008-12 appears to be over and will lead to less pressure in real estate prices and help the housing theme to perform better.

"Current dynamics suggest that the demand is gradually surpassing the incremental supply of new houses in India and higher urbanisation would mean higher demand for real estate," said Vishal Vij, founder, Nestegg Wealth.

This is the second offering in the housing opportunities space. HDFC Housing Opportunities Fund, launched in December 2017, has delivered CAGR returns of 5.43% since its inception in December 2017.

Financial planners point out that it is important to time entry and exit in sectoral funds to generate alpha.

"With the sector having gone through years of pain, aggressive investors can look at participating in the NFO for a 3 to 5 years horizon," said Vij. He believes it will be a good idea to exit and book profits once the market starts factoring in over-optimism in this space.