HDFC Mutual's new fund raises Rs 3,500; the most by any fund since 2007

MUMBAI: HDFC Housing Opportunities Fund, a close end equity scheme launched by HDFC Mutual Fund, has raised Rs 3,500 in its new fund offer (NFO), which closed on November 30. This is the highest a close-ended NFO has raised since 2007, when UTI Infrastructure Advantage Fund mopped up Rs 3500 crore, according to Value Research.

A spokesperson for HDFC Mutual refused to comment on the final collections.

The highest-ever mobilization in a NFO was Rs 5790 crore by Reliance Focused Large Cap Fund, an open end mutual fund scheme in July 2006. In a close-ended scheme, investors can’t redeem before the pre-decided tenure, while money can be pulled out of an open ended product at any point.

HDFC Housing Opportunities Fund’s tenure is 1,140 days, a little over three years. The scheme is betting on affordable housing and industries benefitting from this sector.

Wealth managers believe the amount mobilized holds significance given there is virtually no liquidity for the entire duration of the fund. Units once allotted are listed on the exchange and investors who want an exit can only sell there. However there is very little trading of such units on the exchange giving investors no exit, before the end of the tenure.

“Thematic and close end funds are not recommended to first time investors We recommend such funds only to savvy investors who have experienced mutual funds and ask them to allocate 5-10% of their portfolio to such funds," says Rupesh Bhansali, Head (Distribution), GEPL Capital.