HDFC Launches Banking & Financial Services Fund For Investors

Mumbai: HDFC Asset Management Co. Ltd, Investment Manager to, the schemes of HDFC Mutual Fund, one of India’s leading mutual fund houses with Rs 4.1 trillion in assets under management, announced the launch of New Fund Offer (NFO) for investors – HDFC Banking and Financial Services Fund – Growing Sector on a digital accelerator.

The new fund aims to invest in the banking and financial services sector across segments and market capitalization including, banking, broking, asset management, wealth management, insurance, non-banking financial companies (NBFC), and other companies that may be engaged in providing financial services.

The fund will predominantly invest in companies that are leaders and/or are gaining market shares due to superior execution, scale, and better adoption of technology. The fund will also focus on companies that are likely to see a turnaround in profitability and have the potential of being re-rated.

Finally, the fund may also focus on opportunities in new listings including pre-IPO participation in lending, insurance, capital market businesses, and Fintechs companies. The NFO is open for subscription and will close on June 25, 2021.

HDFC Asset Management Co. Ltd. believes that this is an opportune time for banking and financial services funds, with GDP growth bottoming out and robust economic growth likely^ in FY22 and beyond.

The growth is expected to be led by the normalization of economic activity and pent-up demand while global growth and ample liquidity should further aid the revival. The measures taken by Government and RBI to support the economic revival should also benefit the sector.

Indian Banking in the best shape after many years, the CAPEX cycle is likely to revive and should support credit growth.

The corporate NPA cycle is largely behind us and should improve going forward aiding the sector. Further, the massive increase in the digital delivery of services compared to the pre-covid period is likely to drive costs lower and is a positive for the financial services space.

Additionally, the low-interest rates and increasing retail participation is another positive for capital market-linked businesses. Again, the insurance sector is also set to benefit post-pandemic as the increasing awareness is likely to improve penetration.

Commenting on the new fund launch, AnandLaddha, Fund Manager, said, “Over last two decades the banking and financial services sector has grown faster than the GDP. Despite this strong growth in the past, the penetration of various banking and financial services in the Indian economy is low. This means there is still scope for this sector to continue to grow.

Further, the BFSI sector consists of many sub-sectors which have businesses which are scalable and sustainable, thus the sector offers a well-diversified investment opportunity.”

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