HDFC Nifty Realty Fund suspends lump sum investments, limits SIPs
HDFC Mutual Fund has stopped accepting new subscriptions and imposed restrictions on systematic investment plans (SIPs) for its newly launched Nifty Realty Index Fund. The fund, which exclusively targets the domestic real estate sector, was initially open for subscription from March 7 to March 21 and resumed ongoing subscriptions and redemptions starting April 2. HDFC Mutual Fund is India's third-largest asset management company,
New investment limitations imposed on HDFC Realty Index Fund
Starting April 8, HDFC Mutual Fund will no longer accept fresh lump sum investments, additional purchases, or switch-ins for its Nifty Realty Index Fund. The fund house has not disclosed the reason behind this decision. New systematic transactions registrations such as SIPs and Systematic Transfer Plans (STPs) will be capped at ₹1 lakh per investor per PAN under the monthly frequency option.
Existing systematic transactions and redemptions unaffected
HDFC Mutual Fund's announcement clarified that systematic transactions registered before the effective date will continue as usual. There will be no restrictions on redemptions, switch-out, registration of fresh Systematic Withdrawal Plan (SWAP), and STP-out from the scheme. The decision comes after a significant 140% surge in the Nifty Realty Index over the past year. Earlier today, the index touched an all-time high of 959.1.
Nifty Realty Index's high valuations and recent rally
As of March 28, the price-to-earnings (P/E) ratio of Nifty Realty Index has soared to 59.04 following a steep rally over the past year. This is in stark contrast to the P/E of Nifty 50 Index, which is around 23. Industry insiders speculate that HDFC MF's decision to limit inflows into its Nifty Realty Index Fund may be due to these high valuations and rally in realty stocks.
Overview of HDFC Nifty Realty Index Fund
The HDFC Nifty Realty Index Fund is a passive fund that invests in stocks part of the Nifty Realty index. Managed by Nirman Morakhia and Arun Agarwal, the fund currently comprises 10 constituents, with DLF holding the highest weightage at 29.2%. Other funds focusing on the realty theme have also recently emerged, including Motilal Oswal Nifty Realty ETF launched on March 15 and Tata Nifty Realty Index Fund set to open on April 8.
