HDFC MF stops fresh inflows into Realty Index fund

HDFC Mutual Fund has stopped fresh investment in the HDFC Nifty Realty Index Fund days after it was opened up for further investment and redemption post the New Fund Offer period.

The NFO started on March 7 and closed on March 21. It resumed ongoing subscriptions and redemptions on April 2.

The fund house on Wednesday said it will stop accepting lump-sum investments into its HDFC Nifty Realty Index Fund from April 8. The restriction also applies to systematic investment plans (SIPs) and top-ups, which will be limited to ₹1 lakh a month per investor (identified by PAN).

However, it said systematic transactions registered prior to the Effective Date shall continue to be processed. The restriction on inflows into the passive fund has perplexed investors as unlike other actively managed funds, which are bound to derive alpha, the HDFC Nifty Realty Index Fund has to only deliver returns equivalent to that of Nifty Realty index by investing in stocks that constitutes the index.

The index has 10 realty stocks with DLF having the highest weightage of 29 per cent, followed by Macrotech Developers at 14 per cent, Godrej Properties and Phoenix Mills.

The decision comes after a significant 135 per cent surge in the Nifty Realty Index in last one year. The index touched an all-time high of 959 points on Tuesday but closed down 3 per cent at 925 points on Wednesday due to profit booking.

HDFC Mutual Fund is the third-largest asset management company in India in terms of assets, with average assets under management of ₹6.13-lakh crore as of March-end.

Similarly, HDFC MF discontinued accepting lump-sum investments in its HDFC Defence Fund last June owing to a limited number of defence sector stocks.

The scheme was launched on May 19 and its new fund offer period closed on May 30. The fund house has also imposed restrictions on the maximum investments through systematic investment plans of ₹10,000 per month.

The scheme had a universe of 21 stocks, which are largely mid and small-sized companies and valuation of these companies had run-up sharply.