Tata Mutual Fund (TATA MF) has launched a new housing fund.
The Tata Housing Opportunity Fund was brought in to take advantage of the rising demand for housing.
The fund will invest most of its money in companies related to construction materials.
New Delhi. If you think that the demand for houses will increase in the near future and good returns can be obtained 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. However, two funds of the same category have been launched earlier.
The Tata Housing Opportunity Fund was brought in to take advantage of the rising demand for housing. However, this fund will not solely invest in housing stock, but will also invest in companies related to the home building business. Tata MF is expecting better returns from it.
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This fund has been brought in with more allocation to construction materials at a time when older funds in the same category did not give much return. This New Fund Offer (NFO) has been opened since 16th August i.e. yesterday.
What is this whole plan?
The fund will consider Nifty’s housing index, which comprises 50 stocks, as its benchmark. But these funds are bigger and will invest in more stocks and businesses. It can give good returns during the booming demand in the housing sector. Currently housing prices are low, home loan rates are low, there is more urbanization and new projects are being launched in this sector.
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How will this fund be profitable?
Tejas Gutka, manager, Tata Housing Opportunities Fund, said that unlike the benchmark index, which is more infrastructure-focused, the fund will move towards the housing theme through various sectors. He said, “We will focus heavily on the construction materials sector, which can be up to 70 per cent of our portfolio allocation… Also, the portfolio allocation includes large mid and small-cap stocks (about 40-50 per cent allocation in the initial portfolio).
It differs from the housing index, as it consists of 88 percent large-cap stocks. But the fund will focus more on mid- and small-cap stocks, which could help the fund deliver better returns.
Construction materials include businesses such as paints, tiles, ply, sanitaryware and cement. The fund will also invest in other sectors related to housing such as housing finance, consumer electricals and banks.
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First Published: August 18, 2022, 12:32 IST