Mumbai: HDFC Asset Management’s Nifty Realty Index Fund – a concentrated portfolio of 10 property developers-is bestsuited for investors, who can stay put in the scheme for at least five years, said financial planners. As many of these stocks have al- ready run up in the past year, up- sides in the near term could be capped, they said, while recommending diversified equity schemes to the less risk-averse.

“The run-up in stock prices has been sharp in the last one year The fund is highly concentrated and valuations are high, so investors should come with at least a five-year time frame,” said Abhay Mathure, a Mumbai-based mutual fund distributor. Mathure said first-time investors could stay away from thematic funds.

The new fund offer (NFO) is currently open and closes on March 21. This is a passive fund, which will invest in stocks that are part of the Nifty Realty index. The top five constituents of the index are DLF, Macrotech Developers, Godrej Properties, Phoenix Mills, and Prestige Estate Projects.

Analysts said real estate stocks have been among the top performers with property prices firming up amid growing demand.

“Rising per capita incomes, im- proving affordability increased urbanisation, government initiatives of housing for all and RERA provide a large growth runway ahead for the real estate sector,” said Anurag Garg, founder, Ni- He said companies have strengthened their balanced sheets and improved their profitability metrics over the last few years.

In the past year, the Nifty Real- ty TRL Total Returns Index) rо- se 134% as against the Nifty’s re- turns of 28.5%. It eturned 37.9% in je previous free years comared to the Nifs return of 51%.

With stock prices umping in the pastar, company vaations too have xpanded. The Nif- Realty TRI is trading at a price-to-earnings (PE) ratio of 57 times compared to Nifty’s PE of 22.7 times.

Long-term investors are bet- ting on the sector on the grounds that these stocks are still under- performers over a longer period. Since the index’s inception on December 29, 2006, its returns have been flat as against Nifty’s returns of 11.8% on a compounded basis in this period.

Source- The Economic Times

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