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.
HDFC Housing Opportunities Fund–I – 1140D November 2017 was launched on December 6, 2017, and is due for maturity on January 18, 2021.
The NAV of the scheme is at ₹9.52 per unit as on Thursday. An investment of ₹10,000 made in the scheme three years ago would have reduced to ₹9,518 as per the current NAV.
HDFC Asset Management Company will be converting the scheme into an open ended from January 19, 2021.
Earlier this week, Nippon India Mutual Fund had given investors the option to roll over the maturity of its three-year close ended equity scheme due to its poor performance. The redemption Nippon India Capital Builder Fund IV — Series B was extended by 730 days to January 6, 2023 from January, 2021
Since inception, HDFC Housing Opportunities Fund had returned -1.62 per cent as against 9.65 per cent posted by its benchmark.
Vineet Nanda, Founder, Sift Capital said compared to peer groups the fund has been a poor performer and investors could consider to move out to quality funds to improve their portfolio returns.
Vidya Bala, co-founder, Primeinvestor.in, said it is hard to believe that a scheme will perform now, if it did not do so for in the last three years.
However, in a note to investors HDFC Mutual Fund said housing and allied sectors like steel, cement are growing at healthy pace supported by broad based improvement in economic activity.
“We believe that the worst for these sectors is largely behind and growth prospects are good in medium term. This should result in increased housing demand and higher growth rates for sectors connected to housing,” it added.