HDFC’s new equity scheme banks on future tech, AI; should you invest?

HDFC Asset Management Co. Ltd. has announced the launch of the HDFC Innovation Fund, an open-ended actively managed equity scheme focused on companies embracing innovation across sectors. The New Fund Offer (NFO) opens on June 27, 2025, and will remain open till July 11, 2025.

According to the company, this thematic fund is designed to tap into India’s fast-growing innovation ecosystem, which is being fuelled by a surge in digital adoption, a maturing startup culture, rapid technology disruptions, and government-backed reforms encouraging entrepreneurship and digital infrastructure.

What is the HDFC Innovation Fund?

The HDFC Innovation Fund aims to invest in companies that are either innovating themselves or are early adopters of breakthrough technologies. This may include themes such as artificial intelligence, fintech, electric vehicles, clean energy, biotechnology, Industry 4.0, and digital platforms, among others.

The fund will be managed by Amit Sinha, Senior Equity Analyst and Fund Manager at HDFC AMC, and will follow a bottom-up stock selection approach, focusing on product, process, and business model innovation. It will maintain a diversified portfolio across market capitalisations and sectors.

The minimum investment during the NFO and later continuous offer period is ₹100. It comes in both Direct and Regular plans, with options for Growth and Income Distribution cum Capital Withdrawal. Investors should note that an exit load of 1% applies if units are redeemed within one month of allotment. Post that, there is no exit load. The benchmark for the scheme is the NIFTY 500 TRI.

According to Sinha, the fund provides an opportunity to benefit from the next generation of growth drivers, which will be rooted in transformation and innovation rather than traditional business models. HDFC AMC’s CEO Navneet Munot echoed this, saying the fund leverages the AMC's strong research capability to unlock long-term wealth creation from forward-looking businesses.

Should you invest?

While NFOs allow investors to enter new or untapped investment ideas (like innovation, ESG, etc.) at the ground level, potentially capturing growth early, there is no track record or portfolio to assess, making it hard to evaluate fund performance or consistency since it is a new scheme.

Experts believe innovation funds target companies poised for long-term disruption-led growth, which could significantly outperform traditional businesses over time. However, innovation-based companies may also be more volatile and speculative, especially in early stages of adoption or during macroeconomic uncertainty.