The trend of mutual funds bringing in new and innovative investment themes is gaining traction in the market. One such emerging theme is export-oriented mutual funds. These schemes invest in stocks of companies that generate a substantial portion of their revenue through exports. The main objective of these funds is to deliver higher returns by creating an actively managed portfolio of equity shares in companies benefiting from the export of goods and services. Recently, HSBC Mutual Fund introduced the HSBC India Export Opportunities Fund NFO, with the subscription period ending today, 19th September 2024. Let’s understand why export-themed mutual funds could become a profitable investment for investors.
India’s Growing Strength in the Export Sector
Aman Verma, Director at Dhanvantari Capital Services Pvt Ltd, believes that India is rapidly transforming into an export powerhouse due to government initiatives such as the “Make in India” campaign and the Production-Linked Incentive (PLI) scheme. These policies have been instrumental in boosting industrial output and attracting significant foreign investments. This shift is positioning India as a crucial player in the global economy by improving production efficiency, promoting innovation, and enhancing skill development.
India’s economic potential is also reflected in the projections by global agencies. Moody’s estimates that India’s GDP will grow at 7.2% in 2024 and 6.6% in 2025. Additionally, the World Bank has projected a 7% growth rate for FY 2024-25. The country’s export performance is integral to this growth, with exports expected to surpass $800 billion by FY 2024. In the first quarter alone, India’s exports exceeded $200 billion, showcasing the country’s robust trade policies amid global challenges such as sectoral slowdowns and geopolitical tensions.
The government’s strategy to diversify export products and strengthen global trade partnerships will play a pivotal role in maintaining the momentum of India’s growth story. Along with this, effective fiscal management, including controlling the fiscal deficit and ensuring strong revenue collection, has increased investor confidence in the Indian market.
Rising Opportunities in the Export Sector
Kailash Kulkarni, CEO of HSBC Mutual Fund, highlights that the Indian government’s ambitious goal of reaching $2 trillion in annual exports by 2030 reflects the nation’s commitment to expanding its global trade presence. India’s strength in skilled labor, combined with supply chain diversification and various incentives, enhances its competitive edge in international markets.
Exports represent an ever-evolving opportunity for Indian businesses. With the government’s ongoing reforms and incentives aimed at boosting productivity and efficiency, India is well-positioned to tap into the export sector’s growth potential. This provides an opportunity for businesses to improve their processes and take advantage of global demand, further supporting India’s overall economic development.
Understanding the HSBC India Export Opportunities Fund
The HSBC India Export Opportunities Fund NFO opened for subscription on 5th September 2024 and closes today, 19th September 2024. This open-ended equity scheme follows the export-oriented theme, meaning it will invest in companies that are heavily involved in exports. The fund will track the Nifty 500 Total Return Index (TRI) and will be diversified across different market capitalizations, including small-cap, mid-cap, and large-cap stocks.
By investing in this scheme, investors have the potential to benefit from India’s growing role in the global export market. The fund aims to capture the long-term growth prospects of companies that are leaders in their respective export industries.
Why Export Funds Could Be a Smart Investment
Export-focused mutual funds have the potential to offer high returns over the long term by leveraging India’s growing export market. With government policies favoring the expansion of export industries and ongoing reforms to enhance productivity, such funds could see sustained growth. Investors looking for diversified exposure to export-oriented companies across various sectors and market capitalizations can consider adding export opportunity funds to their portfolios.
As India continues to strengthen its position in global trade, these funds offer a promising avenue for capitalizing on the country’s economic growth, making them an attractive investment option for long-term gains.
(Disclaimer: Mutual Funds investments are subject to risks. Always consult with a financial expert before making any investment decisions.)
