NFO Update: HDFC Mutual Fund launches consumption theme based passive fund

HDFC Mutual Fund announced the launch of the HDFC Nifty India Consumption Index Fund, a scheme designed to provide investors exposure to companies that are expected to benefit from India’s long-term consumption growth.

The new fund offer or NFO of the scheme is open for subscription and will close on February 13.

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The HDFC Nifty India Consumption Index Fund seeks to replicate the performance of the Nifty India Consumption Index (TRI), which tracks companies with exposure to India’s domestic consumption theme. The index comprises 30 stocks across sectors such as FMCG, Automobile and Auto components, Consumer Services, Consumer Durables, Healthcare and Telecom^. Companies included in the index derive more than 50 percent of their revenues from domestic operations, making it a focused play on India’s consumption-driven growth, according to a press release by the fund house.

India’s consumption story is supported by multiple structural drivers, including rising per capita income, favourable demographics, premiumisation, formalisation of the economy, and increasing digitisation. In addition, policy measures such as GST rationalisation are expected to support consumer spending across categories over the medium to long term.

“Consumption has been one of the most enduring pillars of India’s economic growth. As income levels rise and aspirations evolve, spending is becoming broader and more diversified across categories and services. The HDFC Nifty India Consumption Index Fund offers investors a simple and efficient way to participate in this long-term structural theme through a diversified basket of consumption-oriented companies,” said Navneet Munot, Managing Director and Chief Executive Officer, HDFC Asset Management Company.

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The fund will be managed by Nandita Menezes and Arun Agarwal. Investors can invest with a minimum amount of Rs 100 during the NFO period and also during the continuous offer period after the scheme reopens for subscription and redemption. There is no upper limit on investment, and allotment of units will be done after deduction of applicable stamp duty, if any.

The scheme being thematic in nature carries higher risks versus diversified equity mutual funds on account of concentration and theme specific risks.