HDFC Asset Management Company has launched HDFC Banking and Financial Services Fund. The new fund aims to invest in the 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 that 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 opens on June 11, 2021 and closes on June 25, 2021.

HDFC Mutual Fund views that this is the opportune time for banking and financial services fund, with GDP growth bottoming out and robust economic growth is likely in FY22 and beyond. The growth is expected to be led by normalization of economic activity and pent-up demand, global growth and ample liquidity should further aid the sector. The measures taken by Government and RBI to support the economic revival will benefit the sector. 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 massive increase in digital delivery of services compared to pre-covid period likely to drive costs lower, which is a positive for the financial services space. The low interest rates and increasing retail participation is another positive for capital market linked businesses. The insurance sector is also set to benefit post pandemic as the increasing awareness likely to improve penetration, states the release.

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