Tata Mutual Fund on Tuesday announced the launch of a new open-ended equity scheme, Tata Housing Opportunities Fund, focused exclusively on the housing sector.
The New Fund Offer (NFO) will close on August 29, 2022.
Commenting on the open-ended equity scheme, the Fund said the product offers prospective buyers an excellent long-term investment opportunity.
The scheme seeks to capitalize on the up-cycle phase of the sector when the growth rate typically accelerates. It will also specifically target listed companies in the industry, including businesses involved in manufacturing cement, steel, paints, tiles, electrical, plumbing, bathware, etc.
The Fund stressed that some are "good quality businesses" and offer reasonable growth prospects. However, it also has a word of caution: The growth rate can slow down during a down-cycle, but not necessarily for long periods. Hence, it will have exposure to both up and down cycles.
Key Features Of The Tata Housing Opportunities Fund
The Fund aims to invest in businesses that benefit from the real estate sector.
The portfolio will include companies that supply building materials, products, and services to the housing industry. For instance, the companies' products that people are most likely to buy.
The minimum investment amount of the Fund is Rs. 5,000, and after that, in multiples of Re 1.
Additionally, if the customer seeks to avail of redemption, systematic withdrawal plan (SWP), or systematic transfer plan (STP) on or before the expiry of 365 days from the date of allotment, then the following two scenarios would apply.
There will be no charges if the switched-out amount is not more than 12% of the original investment cost, but if it is over 12%, then 1% will be applicable.
However, it is important to carefully read the document for those who plan to try out the scheme as mutual fund investments come with various market risks.
The Fund will track the NIFTY Housing Index (TRI).
Main Objectives Of The Fund
The key objective of the Fund is to generate long-term capital growth by investing primarily in equity and equity-related instruments engaged in housing-focused businesses. However, the scheme does not guarantee any returns.
The Fund noted that "lower interest rates, lack of supply, higher affordability and benign price environment led to increase in end-user demand, further accelerated in a post covid world."
Speaking at the scheme launch, Fund manager Tejas Gutka said the index "has a wider industry classification" and "some of these businesses are indirect beneficiaries of the real estate sector."
Hence, a significant portfolio share is expected to be a "direct beneficiary of a housing up-cycle" and "will have a reasonable divergence from the benchmark."
Gutka said the Fund would focus on bottom-up stock selection based on a "growth-at-a-reasonable-price (GARP)" philosophy.
He also noted that the selection of companies is also being made keeping in mind the possible advantages they may have from changes in the country's demography and socio-economic conditions like per-capita income, urbanisation, rising middleclass, young and educated workforce, etc.
