HDFC Manufacturing Mutual Funds: Hurry to Make Your Returns Now
Introduction
The HDFC Manufacturing Fund is a thematic equity fund, which means it specifically invests in companies that are part of the manufacturing sector. The fund’s objective is to generate long-term capital growth by investing in these manufacturing companies.
This fund gives investors the flexibility to choose the plan that suits their investment needs.
The HDFC Manufacturing Mutual Fund was recently launched on May 5th, 2024. Since its launch, it has delivered a 5.42% return.
The size of the fund, which is also known as its Assets Under Management (AUM), is currently ₹10,345 crores as of May 31st, 2024. This indicates that the fund has been able to attract a significant amount of investor money in a short period.
In summary, the HDFC Manufacturing scheme provides investors an opportunity to participate in the growth of the manufacturing sector in India. With its two plan options and recent launch, it allows investors to choose an investment option that fits their preferences and investment horizon. The fund’s initial performance and sizeable AUM suggest that it may be worth considering for investors interested in the manufacturing theme.
Key Features of HDFC Manufacturing Fund
Investment Objective: The primary goal of the HDFC Manufacturing Fund is to generate long-term capital appreciation. By investing in equity and equity-related securities of manufacturing companies.
Benchmark: The fund tracks the NIFTY India Manufacturing Index, serving as its performance benchmark.
Expense Ratio: The direct plan boasts an expense ratio of 0.40%, lower than the category average of 0.67%. The regular plan also maintains an expense ratio of 0.40%.
Minimum Investment: Investors can start with a minimum investment of ₹100 for the direct plan and ₹500 for the regular plan. With subsequent investments starting at ₹100 for both plans.
Exit Load: There is no exit load applicable for either the direct or regular plans.
Risk Grade: The fund carries a Very high-risk grade, suitable for investors with a high tolerance for risk.
Analysing the Performance of HDFC Manufacturing Fund
To analyse the performance of a scheme helps in making an informed decision about investing in it. Let us delve into understanding its performance during different times:
Return since Launch: Since its inception on May 15, 2024, the fund has delivered a return of 5.7%.
1-Year Return: The direct plan has yielded a return of 3.17% over the past year, while the regular plan has achieved 3.88%.
3-Year Return: Over three years, the direct plan has recorded a return of 67.96%, and the regular plan has shown a return of 70.58%.
SIP Returns: For the direct plan, SIP returns stand at 2.24% for the past week and 3.17% since inception. The regular plan has delivered SIP returns of 6.48% for the past week and 3.88% since inception.
Portfolio Allocation of HDFC Manufacturing Mutual Fund
The distribution of the portfolio tells us about how diversified a particular scheme is. Let us check it out:
Asset Allocation
· The Axis India Manufacturing Fund primarily invests in equity and equity-related securities.
· With a focus on companies operating in the manufacturing sector.
· This means the fund’s portfolio is heavily weighted towards stocks of manufacturing companies.
Sector Allocation
· The fund does not publicly disclose the specific sector allocations within its portfolio.
· This means the information on how much of the fund’s assets are allocated to different manufacturing sub-sectors is not available.
Market Cap Allocation
· Similarly, the fund does not provide detailed information on how its equity investments are distributed across different market capitalization sizes.
· Such as large-cap, mid-cap, or small-cap companies. This data is also not publicly disclosed by the fund.
In summary, while we know the Axis India Manufacturing Fund is focused on the manufacturing sector. The specific details on its sector and market capitalization exposures are not readily available. This lack of transparency makes it challenging for investors to fully understand the fund’s investment strategy and risk profile based on the limited information provided.
How is the Tax Calculated on the HDFC Manufacturing Fund?
Short-Term Capital Gains (STCG)
· If you sell the units (or shares) of the Axis India Manufacturing Fund within 1 year of purchasing them, it is considered a short-term investment.
· In this case, you will have to pay a 15% tax on the gains (profits) you made from selling the units.
Long-Term Capital Gains (LTCG)
· If you hold the units of the Axis India Manufacturing Fund for more than 1 year before selling them, it is considered a long-term investment.
· For long-term gains, you will have to pay a 10% tax, but only on the gains that exceed ₹1 lakh.
· So if your total long-term gains are ₹1.2 lakhs, you will pay 10% tax on ₹20,000 (₹1.2 lakhs — ₹1 lakh).
In simple terms, if you hold the fund’s units for less than 1 year, you’ll pay a 15% tax on your gains. And if you hold them for more than 1 year, you’ll pay a 10% tax, but only on the gains above ₹1 lakh. This is an important consideration for investors when planning their investments and understanding the tax implications.
Final Statement
In conclusion, the HDFC Manufacturing Fund presents an enticing opportunity for investors looking to capitalize on the growth potential within India’s manufacturing sector. With its recent launch and commendable initial performance, the fund offers flexibility through direct and regular plan options, accommodating varying investment horizons. Supported by a competitive expense ratio and no exit load, it is particularly appealing for those considering SIP, allowing for disciplined wealth accumulation over time. However, given its high-risk grade and the inherent volatility of the manufacturing industry, potential investors should approach it with careful consideration. Seeking guidance from a financial advisor and conducting thorough research are advisable steps to assess suitability before making any investment decisions.
