Investing in thematic funds with a long-term vision: Chintan Haria, ICICI Pru AMC

The real estate space underwent a time correction from 2013 and is currently priced attractively. Also, the excess supply of 2008-2012 seems to be digested as shown by the housing demand and supply figures in the 7 major cities of India. This will likely lead to less pressure on house prices, which will ultimately help the housing theme perform better. Chintan Haria, Head of Product Development and Strategy, ICICI Prudential AMC.

In an exclusive interview with Sanjeev Sinha, Mr. Haria talks about their recently launched housing theme fund and shares his views on what makes him bullish on housing. Excerpts:

ICICI Prudential AMC has launched a thematic fund on housing. What makes you optimistic about housing?

We believe that housing is on the cusp of a vigorous cycle. India’s favorable demographics, growing middle class population, increased urbanization, better accessibility and lower interest rates on home loans create a conducive environment for housing and related topics. In addition, the government has attempted to stimulate activity in the sector through various support measures such as affordable housing, the Affordable Rental Housing Complex (ARCH) scheme, increased capital expenditure, cuts stamp duties, 100% FDI for township and conurbation development projects, to name a few. With India being one of the fastest growing economies, housing demand is expected to be strong as seen historically in other developed economies.

Real estate has been in a down cycle for nearly a decade. Do you think the correction is finally over?

The real estate space experienced a temporal correction from 2013, a phase where the gains in land and buildings were mitigated. As a result, we believe the segment is currently priced attractively. Also, the excess supply of 2008-2012 seems to be digested as shown by the housing demand and supply figures in the 7 major cities of India. This will likely lead to less pressure on house prices, which will ultimately help the housing theme perform better.

In terms of portfolio construction, what sectors will the fund be exposed to?

The program has the ability to invest in core eligible sectors that are part of the Nifty Housing Index. Some of the sectors the fund can invest in include property developers, financial services providing housing finance, cement and cement products, consumer electronics, paints, steel, appliances and appliances toilets, to name a few.

What should investors keep in mind when investing in a thematic fund like the Housing Opportunities Fund?

In addition to general equity risks, as the fund is thematic in nature, there may be periods of up and down cycles. So invest in thematic funds with a long-term vision. However, the theme seems comfortably placed over the next five years. It is advisable to consult your financial advisor on the suitability aspect.

Should investors opt for a lump sum or SIP payment in this fund?

Investors should review their overall asset allocation and plan their investments after consulting their investment advisor. During the NFO period (until April 11, 2022), the minimum request amount is Rs 5000.

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