HDFC Launches HDFC Innovation Fund : Opportunities in Tech-Led Growth

The HDFC Innovation Fund is a new, open-ended equity scheme launched by HDFC Asset Management Company, designed to invest in companies driving innovation across various sectors in India. The fund aims to capitalise on the growing innovation ecosystem in India, fueled by digital adoption, a thriving startup landscape, and supportive government policies. It focuses on companies adopting innovative strategies in products, processes, and business models.

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Key Features of HDFC Innovation Fund

Opening Date: June 27, 2025
Closing Date: July 11, 2025
Exit Load: 1% exit load if redeemed within 1 month
Minimum Investment: ₹100
Benchmark Index: NIFTY 500 Total Returns Index

Objective of the HDFC Innovation Fund

To generate long-term capital appreciation/income by investing in companies that are adopting innovative themes and strategies. There is no assurance that the investment objective of the Scheme will be achieved.

Investment Strategy of HDFC Innovation Fund

• HDFC Innovation Fund - Direct (G) Invests 80–100% in innovative companies across sectors like tech, healthcare, and fintech.
• Bottom-up stock selection focused on innovation.
• Can allocate up to 20% in other equities, 10% in REITs/InvITs, and 20% in debt instruments.
• Benchmarked to NIFTY 500 TRI.
• ₹10/unit at launch; 1% exit load if redeemed within 1 month.

Risks Associated with HDFC Innovation Fund

Here are the key risks associated with HDFC Innovation Fund in short:

• Market Risk: Equity investments can fluctuate with market conditions.
• Thematic Concentration Risk: Focus on innovation sectors may increase volatility.
• Sector Risk: Heavy exposure to tech, healthcare, and fintech can be affected by sector-specific downturns.
• Liquidity Risk: Smaller or emerging companies may have lower liquidity.
• Credit Risk: Debt portion faces risk of issuer default.

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Risk Mitigation Strategy by HDFC Innovation Fund

• Diversifies across multiple innovative sectors to reduce sector-specific risks.
• Maintains a mix of equity, debt, and money market instruments to balance risk and return.
• Uses bottom-up stock selection focusing on financially strong, innovative companies.
• Limits exposure to illiquid or highly volatile stocks.
• Monitors portfolio continuously to manage market and credit risks.

What Type of Investor Should Invest in the HDFC Innovation Fund?

The HDFC Innovation Fund is best suited for risk-tolerant investors seeking long-term capital appreciation by investing in companies that drive innovation in India. It is best suited for investors:

• High Risk Tolerance
• Long-Term Investors
• Belief in India's Growth Story
• Focus on Specific Sectors
• Not for Beginners
• Clear Financial Goals

This fund is particularly attractive to those who believe in India's potential for growth through innovation across various sectors.