HDFC Mutual Fund announced the launch of the HDFC MNC Fund, an open-ended scheme, on February 17, 2023. Those looking to invest in equities of multinational companies (MNCs) may invest their money through the new fund offer (NFO) open till March 03, 2023.
Q. What kind of mutual fund scheme is this?
This is an open-ended equity scheme that would generate long-term capital income by investing primarily in equities and equity-related instruments of multinational companies (MNCs). However, there can be no assurance that the scheme’s investment objective will be realized.
Q. What is the main objective of investing in this fund?
The idea behind putting money in this scheme is to achieve returns through investments in shares and securities of MNCs. Since it is an open-ended scheme, interested investors can put their money into them once the mutual fund house starts allotting units under this scheme.
Under normal circumstances, the asset allocation (% of Net Assets) of the scheme's portfolio will be as follows:
| Types of instruments | Minimum Allocation (% of Net Assets) | Maximum Allocation (% of Net Assets) | Risk Profile |
| Equity and Equity related instruments of MNCs | 80 | 100 | Very High |
| Equity and Equity related instruments of companies other than above | 0 | 20 | Very High |
| Units of REITs and INVITs | 0 | 10 | Medium to High |
| Debt securities, money market instruments and Fixed Income Derivatives | 0 | 20 | Low to Medium |
| Units of Mutual Fund | 0 | 20 | Low to High |
Q. How may one invest in this fund?
The scheme offers units of Rs. 10 each. Investors can invest under the scheme with a minimum investment of ₹100 and in multiples of Re 1, thereafter. There are both regular and direct plans available including payout options like the Growth Option and Income Distribution cum Capital Withdrawal option (IDCW).
Q. Are there similar mutual funds in the market?
This is not the first time that an MNC fund has been introduced to the market. Prior to this, many asset management companies have launched such funds in the past. Some of them include:
| Name of the fund | Five-year returns (in %) | Returns since inception (in %) |
| SBI Magnum Global Fund | 14.61 | 15.91 |
| UTI MNC Fund | 10.02 | 14.57 |
| Aditya Birla Sun Life MNC Fund | 5.02 | 13.84 |
| ICICI Prudential MNC Fund | - | 20.81 |
| Source: ET Money | ||
Q. How will the scheme benchmark its performance?
The performance of the scheme is measured against the NIFTY MNC TRI (Total Returns Index). Since the scheme proposes to invest predominantly in multinational companies, the index is an appropriate benchmark for the scheme. The performance will be benchmarked to the Total Returns Variant of the Index.
Q. Are investors allowed to redeem their mutual fund investments?
No “Entry Load” is applicable pursuant to SEBI Circular No. SEBI/IMD/CIR No.4/168230/09 dated June 30, 2009. However, the fund house may charge an “Exit Load”
In respect of each purchase/switch-in of units, an “Exit Load” of 1% is payable if units are redeemed/switched out within a year from the date of allotment.
No “Exit Load” is payable if units are redeemed/switched out after 1 year from the date of allotment.
No Entry/Exit Load shall be levied on bonus units and units allotted on re-investment of Income Distribution cum Capital Withdrawal. In respect of Systematic Transactions such as SIP, GSIP, Flex SIP, STP, Flex STP, Swing STP, and Exit Load, if any, prevailing on the date of registration/enrolment shall be levied.
Q. Who will manage this scheme?
Rahul Baijal will be managing the equity and debt assets in this scheme.
Q. Does the fund contain any inherent risk?
The scheme involves “Very High Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to stay invested for a long period. However, investors must consult their financial advisors if in doubt about whether the product is suitable for them.
