HDFC Innovation Fund NFO: Invest in India’s Future

HDFC Innovation Fund: Driving Growth in India with Innovation

The HDFC Innovation Fund NFO (June 27–July 11, 2025) can give investors an opportunity to benefit from India’s next growth wave by investing in innovation companies. The thematic fund invests in companies that are leaders in product, process, or model innovation. As a result, the fund offers a compelling long-term wealth creation opportunity.

This HDFC NFO isn’t just a thematic fund; it’s a gateway to India’s next decade of growth. From electric mobility to digital infrastructure, it captures emerging opportunities early. Backed by HDFC Mutual Fund’s 25-year legacy and an experienced investment team, it offers both credibility and a compelling path to future-ready wealth creation.

Why Focus on Innovation?

We have entered a more demanding environment, where operating in ‘business as usual’ mode has shifted from a luxury to a necessity. History has shown that innovators make far better returns than their peer group.

• Tesla was more than 30 Times better than traditional auto indices.
• Netflix was more than 213 times better than legacy media companies.
• India’s UPI grew nearly 9 times after COVID
• Disruptive ideas, powered by scalable tech and cost efficiency, are driving exponential growth.
•  Investors are leveraging these shifts, and this HDFC NFO aims to tap into this trend with a systematic, risk-adjusted strategy.

Key Highlights of the HDFC Innovation Fund

• NFO period: June 27, 2025, to July 11, 2025
• Minimum Investment: ₹100
• Generate long-term capital appreciation through investments in companies that are either involved in or adopting innovative themes and strategies.

The fund has the mandate to invest based on innovation in:

1) Product Innovation (ex, electric vehicles, biotech)

2) Process Innovation (ex, UPI, automation)

3) Business Model Innovation (ex, quick commerce, SaaS)

• At least 80% of the Fund assets will be invested in equity instruments linked to innovation.
• And a max limit of 20% investment in debt, money market instruments, REITs, or InvITs

 Sector Diversification

The Fund will provide diversification across innovation-led high-growth sectors, including:

• Information Technology
• Healthcare & Pharma
• Energy & Renewables
• Financial Services
• Automobiles (EVs and battery technology)
• Digital platforms
• Defence & Industrials

What Makes the HDFC Innovation Fund Different?

• The fund manager uses a bottom-up rather than a top-down approach. They will examine a company for innovation on many metrics.
• The fund contains many large and small, and mid-caps, and it is particularly interesting in the fact that:
  • 57% of eligible companies are small-cap
  • 24% of eligible companies are mid-cap
  • 19% of eligible companies are large match cap
  • The fund does not select by follow typical P/E or P/B ratios rather, it considers the unit economics and long-term proposition for

Why Now? India’s Innovation Supercycle

India is at a pivotal point in the innovation cycle, driven by:

• India is 2nd in AI/ML talent pool and 3rd in cloud professionals, for a fraction of the global salary standards
• The Scale and Breadth of Digital Infrastructure are increasing with UPI (172+ billion transactions in 2024) and Aadhar (1.3 million+ + users), ONDC, and co-WIN platforms.
• From the Atal Innovation Mission and across various policy frameworks, including PLI schemes and tax incentives,- the government of India is committed to investing to push its innovation ecosystem.
• In 2024, funding rounds greater than $3 million accounted for 50.4% of total seed rounds (compared to just 9.4% in FY 2017)—a clear sign that investors are confident in scalable innovation.

Potential Areas of Growth Supported by HDFC Innovation Fund

Green Energy & Storage

Solar PV demand grew 5x in 5 years, and with a target of 500 GW from renewables by 2030, clean energy should enjoy massive growth.

Healthcare & Pharma

Indian pharma companies, backed by the Indian government, are investing heavily in new chemical entities, biotech innovation, and AI-based diagnostics.

Automobiles (EVs & Battery Tech)

India’s EV two-wheeler penetration grew from 0.1% in FY19 to 5.8% in FY25 and the battery manufacturing ecosystem continues to grow, resulting in technology collaborations.

Digital Commerce & SaaS

Digital-first companies like Nykaa, Zomato, and others have grown at exponential rates and therefore provide a core part of the portfolio in the fund.

Is this investment right for you?

The HDFC Innovation Fund NFO is suitable for:

• Investors with a medium to long tenure (5+ Years)

• Investors who are looking for higher growth from thematic investments

• Investors who are accepting of moderate to high volatility

• Investors who wish to invest in early adopters and emerging technologies

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