HDFC Mutual Fund stops lumpsum investment into realty fund

HDFC Mutual Fund has discontinued fresh lumpsum investment into its newly launched HDFC Nifty Realty Index fund. The fund has opened just a month ago on March 7 and closed on March 21.

HDFC Mutual Fund, India’s third largest fund house, in a notice informed about the decision. It, however, did not assign any reason for stopping the lumpsum investments.

It has also capped the systematic investment plans at Rs 1 lakh per PAN card.

The fund reopened for ongoing subscriptions and redemptions from April 2.
Analysts are surprised by the move of HDFC Mutual Fund as the fund is under no pressure to maximise returns as it is an index fund and has to mirror the Nifty Realty index. The fund has risen 135% in the last one year.

One possible reason could be that the index comprises some mid and small cap companies. Markets regulator Sebi has recently cautioned investors about a bubble getting developed in the small and mid cap stocks. And that could be the reason for HDFC to stop lump sum investments into the fund.

The Nifty Realty index has 10 companies with DLF having the highest weightage of 29%.

This is not the first fund into which HDFC has stopped investments. In June last year it stopped accepting  lumpsum investments in its defence fund, after launching it in May. The reason given was that there were not enough stocks in the defence sector.