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From April 8, You Will Not Be Able To Make A Lumpsum Investment

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HDFC Mutual Fund has stopped accepting new subscriptions for the Realty Index fund. A limit has been established to invest through a Systematic Investment Plan (SIP).

Surprisingly, the company had to take this decision just a few days after launching its realty index fund. The new Fund Offer (NFO) to HDFC Nifty Realty Index Fund began on March 7 and was closed on the 21st of March.

The scheme is dependent on the local realty sector. The fund reopened for subscription and redemption from April 2.

However, the fund house in a press release on April 1, stated that any new lumpsum investments including switch-ins and purchases for the HDFC Nifty Realty Index Fund will cease on April 8.

The company has not provided any details regarding the reason for this announcement.

The fund house also said in the notice that registrations for new systematic transactions like SIP will also be accepted only based on monthly investment and this too should not exceed Rs 1 lakh per investor. It also includes SIP topping-up as well as a Systematic Transfer Plan (STP).

The fund house clarified in its announcement that there are no restrictions on redemptions and switch-outs or acceptance for the New Systematic Withdrawal Plan (SWAP) and the STP-out of the scheme.

This step of HDFC MF has been taken at a time when the realty sector is witnessing a stormy boom. Nifty Realty Index had given a whopping return of 140 percent last year and had left all the sectoral indices behind in terms of performance.

Due to this rally in the last year, the price-to-earnings (P/E) of the Nifty Realty Index reached the level of 59.04 on March 28. In comparison, the Nifty-50 index is currently trading at a PE ratio of 23.

According to industry sources, due to the recent rise in realty stocks and very high valuations, HDFC MF has decided to slightly restrict investment in its Nifty Realty Index Fund.

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