12 hrs ago
HDFC Launches REIT Fund as ICICI Prudential Embraces Contrarian Investing
HDFC Mutual Fund has opened a fund that invests in listed real estate trusts and some commercial real estate companies.
These securities can give investors exposure to property-related businesses without buying a building themselves.
The fund follows an index instead of relying on a manager to pick every investment.
Its results can change with rents, property values, interest rates and stock-market conditions.
ICICI Prudential Mutual Fund has also started a fund for companies and industries that investors currently dislike.
It hopes these investments may become more valuable later.
This approach can take a long time and may perform poorly while a company remains unpopular.
Both funds are market-linked, so they do not promise fixed returns.
HDFC Mutual Fund reopened its HDFC BSE REITs and Commercial Real Estate Index Fund for ongoing subscriptions from September 28.
The HDFC fund passively tracks the BSE REITs and Commercial Real Estate Index, investing in listed REITs and selected commercial real estate companies.
ICICI Prudential Mutual Fund launched its Contra Fund NFO, open for subscriptions from September 28 to October 12.
The ICICI Prudential fund will invest in out-of-favour companies and sectors using its VCTS and CLOUD frameworks.
Both funds carry market-linked risks and are aimed at investors comfortable with their respective long-term investment strategies.
- Who
- HDFC Mutual Fund and ICICI Prudential Mutual Fund; the named fund managers and HDFC AMC MD and CEO Navneet Munot are also involved.
- What
- HDFC reopened a REIT and commercial real estate index fund, while ICICI Prudential launched a contrarian equity fund.
- Where
- The funds target India-related listed securities, including India's commercial real estate segment.
- When
- Both activities began on September 28; the ICICI Prudential Contra Fund NFO runs through October 12.
- Why
- HDFC aims to provide indexed commercial real estate exposure, while ICICI Prudential seeks opportunities in companies and sectors it considers undervalued or out of favour.
Fund-house rationale
Investor considerations
Commercial real estate exposure
Fund-house rationale
HDFC says its index fund offers accessible exposure to India's commercial real estate opportunity through listed REITs and related companies.
Investor considerations
Investors are exposed to equity-market conditions, interest rates, borrowing costs, occupancy, rental trends and property valuations rather than guaranteed rental income.
Passive indexing versus active selection
Fund-house rationale
The HDFC fund is designed to replicate its underlying index, giving investors a passive approach to the segment.
Investor considerations
Returns will depend on the securities included in the index, and performance can differ because of expenses and tracking error.
Contrarian investing
Fund-house rationale
ICICI Prudential says unpopular or underperforming companies may offer value when market prices do not reflect their potential.
Investor considerations
A contrarian investment thesis may take time to work, and holdings can remain out of favour or underperform for an extended period.
Key facts
- HDFC fund
- HDFC BSE REITs and Commercial Real Estate Index Fund
- HDFC subscription
- Ongoing from September 28 after completion of its NFO
- HDFC benchmark
- BSE REITs and Commercial Real Estate Index
- ICICI Prudential NFO
- September 28 to October 12
- ICICI strategy
- Contrarian equity investing in out-of-favour companies and sectors
- ICICI frameworks
- VCTS for investment analysis and CLOUD for portfolio construction
- Key risks
- Market-linked losses, tracking error, changing valuations, prolonged underperformance and no guaranteed returns
Sources
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