If you think that the demand for homes will increase a lot in the coming times and good returns can be achieved by investing money in this housing sector, then there is good news for you. Tata Mutual Fund (TATA MF) has launched a new housing fund. Although earlier it has launched two funds of the same category.
The Tata Housing Opportunity Fund has been brought in with an aim to take advantage of the boom in demand for homes. However, this fund will not invest entirely in housing stock, but will also invest in companies related to the business of building houses. Tata MF expects better returns than this.
This fund has been brought in with more allocation to building materials at a time when older funds in the same category have not given much returns. This new fund offer (NFO) has opened from 16th August i.e. yesterday.
what is this whole scheme
The fund will take the housing index of Nifty as its benchmark, which comprises 50 stocks. But this fund will invest in bigger and more stocks and businesses. It can give good returns during the increasing demand in the housing sector. Currently, the prices are low in the housing sector, the house loan rates are also low, more and more urbanization is taking place and new projects are also being launched in this sector.
How will this fund be profitable?
Tejas Gutka, Manager, Tata Housing Opportunities Fund says that unlike the benchmark index, which is more infrastructure-focused, the fund will move towards the housing theme through a variety of sectors. He said, “We will be focusing heavily on the construction materials sector, which can account for up to 70 per cent of our portfolio allocation… Also, the portfolio allocation includes large mid- and small-cap stocks (around 40-50 per cent allocation in the initial portfolio), which are also most of these businesses.
It is different from the housing index, as it comprises 88 per cent of large-cap stocks. But this fund will focus more on mid- and small-cap stocks, which can help the fund deliver better returns.
Building materials include businesses like paint, tiles, ply, sanitaryware and cement. This fund will also invest in other sectors related to housing such as housing finance, consumer electricals and banks.