Is investing in the New HDFC Fund with an MNC theme a good idea?

Participating in new fund offerings is open to seasoned investors with an extensive understanding of exit and entrance timing. MNCs frequently generate free cash flow and pay out big dividends.

New MNC Themed Fund

On February 17, 2023, HDFC Mutual Fund announced that the HDFC MNC Fund, an open-ended plan, will begin trading. The new fund offer (NFO), open until March 3, 2023, is available to anyone wanting to invest in multinational corporation (MNCs) stocks. 

An Overview of HDFC MNC Fund

The investment goal is to deliver long-term capital growth by primarily investing in equities and equity-related instruments of international corporations (MNCs). There is no guarantee of the accomplishment of the Scheme's investment goal. Some features of NFO include:

  • Under normal circumstances, the HDFC MNC Fund will allocate between 80% and 100% of its assets to equity and equity-related investments in multinational corporations (MNCs), 0% to 20% to equity and equity-related investments in corporations other than those listed above, 0% to 10% to units of REITs and INVITs, 0% to 20% to debt securities, money market instruments, and fixed income derivatives, and 0% to 20% to units of mutual funds.
  • The HDFC MNC Fund, a new fund product, would have MNCs as its primary holdings, including businesses having foreign promoter shareholdings of more than 50% or those that are included in the Nifty MNC index. Nifty MNC index returns are 4.11%, 37.35%, and 36.40% for Years 1, 3, and 5, respectively. 
  • Mr Rahul Baijal and Mr Priya Ranjan will oversee the plan (for overseas investments).
  • The NAV of the fund got offered during the NFO period at Rs 10 per unit. The minimum subscription fee is Rs 5,000; after that, it can be any multiple.
  • The programme provides two regular and direct plans, each including the Growth and Income Distribution and Cumulative Capital Withdrawal (IDCW) options. 

Also read: Mutual Fund Investment

Who Is Eligible to Invest in HDFC MNC Fund?

A sectoral or theme fund emphasising MNCs is called HDFC MNC Fund. The fund chooses equities from businesses with sound corporate governance, a distinctive brand identity, outstanding technological prowess, a stable financial condition, and favourable returns. This mutual fund invests in MNCs with operations in India and up to 20% of international assets. Investors solely wanting exposure to multinational corporations (MNCs) may consider investing in the HDFC MNC fund. As it promotes long-term wealth growth, this thematic fund is appropriate for investors with investment horizons of at least five years. Awareness of the market risks involved is essential because this is a theme fund. 

Also read: Mutual Fund Prospectus 

The Bottom Line

Investing in this plan aims to earn profits by buying shares and other Multinational assets. Such funds are suitable for medium- to long-term investment by high-risk investors who are okay with receiving poor returns. 

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