Fund query: Are thematic mutual funds a good fit for you?
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I invested ₹2 lakh in HDFC Housing Opportunities Fund during its launch in January 2018. The fund has performed poorly till date. Now, it is being converted into an open-end fund from January 19, 2021. Existing investors can either stay or move out by exiting by this date. Can you kindly advise the best course of action in this regard? I am a 70-year-old retired senior citizen.
RK Gaur
It would be best to redeem your investments in the fund. If you do not specifically opt for exit, your investments in it will continue by default as it converts into an open-end fund. We have three reasons for our recommendations.
HDFC Housing Opportunities Fund to turn open-ended from January 19
December 18, 2020
The fund has posted negative return of 1.62% since inception
The saga of tweaking the maturity of close ended equity schemes due to their lacklustre performance continues even as equity markets hit a new high every passing day.
HDFC Mutual Fund plans to convert its underperforming close ended HDFC Housing Opportunities Fund Series-I to an open ended a month before its maturity. As an open ended equity, it would continue as thematic equity scheme with the same focus on housing sector. The three-year close-ended scheme has asset under management of ₹3,088 crore.
Suggested InvestmentHorizon: >3 years
Time taken to doublemoney: 2.3 YearsInvestors in the fund locked in for three years have lost an annualised 1.14% over the period.
Existing unitholders have an option to exit at the prevailing NAV, without exit load, from December 18, 2020 to January 18, 2021. Compared to peer groups, the fund has been a poor performer, said Vineet Nanda, Founder, Sift Capital. Investors could move out to quality funds to improve their portfolio returns.
Advisors believe three years is a long time given that the fund has been investing in a wide range of sectors and investors could move out. It is hard to believe that a scheme will perform now, if it did not do so for the last three years, said Vidya Bala, co-founder, Primeinvestor.in