HDFC Mutual Fund has announced the launch of HDFC Banking and Financial Services Fund, a new fund offer (NFO) for retail investors.

The new fund aims to invest in banking and financial services sector across segments and market capitalization including, banking, broking, asset management, wealth management, insurance, non-banking financial companies (NBFC), and other companies that may be engaged in providing financial services. The fund will invest in companies which are leaders and/or are gaining market shares due to superior execution, scale, and better adoption of technology.

The fund will also focus on opportunities in new listings including pre-IPO participation in lending, insurance, capital market businesses and fintechs.

The NFO will run from June 11, 2021 to June 25, 2021. Being an open ended fund, one can also invest thereafter.

HDFC Mutual Fund said this is the opportune time for banking and financial services fund with GDP growth bottoming out and robust economic growth likely in FY22 and beyond. “Indian banking is in best of shape after many years, the capex cycle likely to revive and should support credit growth, the corporate NPA cycle is behind us and should improve going forward aiding the sector,” the company said in a release.

It also noted that the massive increase in digital delivery of services compared to pre-covid period is likely to push costs lower, which is a positive for the financial services space.

Commenting on the new fund launch, Anand Laddha, fund manager, said, “Over last two decades, the financial services sector has grown faster than the rate of growth in gross domestic product. Despite this growth in the past, the penetration of various banking and financial services in Indian economy is low. The banking and financial services sector has demonstrated the ability to generate return over the market return when the economy is in growth phase.”

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