What is LIC New NFO | LIC MF Manufacturing Fund Details 2024

In a significant move toward harnessing the growth of India’s manufacturing sector, LIC Mutual Fund has launched the LIC MF Manufacturing Fund. This fund aims to provide investors with an opportunity to build long-term wealth by investing in equity and equity-related instruments of companies involved in manufacturing and allied activities. The New Fund Offer (NFO) is open from September 20, 2024, to October 4, 2024, offering a diversified investment approach to capitalize on India’s rapidly evolving manufacturing landscape.

This article delves into the key aspects of this fund, including its objectives, investment strategies, and features. Let’s explore what makes the LIC MF Manufacturing Fund an attractive choice for both seasoned and novice investors.

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Understanding the LIC MF Manufacturing Fund

The LIC MF Manufacturing Fund is an equity-focused mutual fund that aims to achieve long-term capital appreciation by predominantly investing in companies following a manufacturing theme. This includes companies directly engaged in manufacturing, those that enable the manufacturing of new-age technology, exporters of Indian-manufactured goods, and firms well-positioned to substitute imports through local manufacturing.

Investment Objective of LIC MF Manufacturing Fund

The LIC MF Manufacturing Fund primarily aims for long-term capital appreciation by investing in equity and equity-related instruments of companies that form part of the manufacturing ecosystem. These companies are involved in production, exports, new-age technology solutions, or are beneficiaries of government incentives like “Make in India” and the PLI scheme. The objective, however, is dependent on market conditions and performance, and there’s no guarantee of its fulfillment.

Investment Strategy of LIC MF Manufacturing Fund

The fund follows an active investment strategy that integrates both top-down and bottom-up approaches to stock selection. Here’s how it works:

• Top-down approach: In this method, the fund managers look at broader economic and market trends to determine which sectors or industries will outperform.
• Bottom-up approach: This focuses on identifying individual companies that demonstrate strong fundamentals, regardless of market trends.

By utilizing these two approaches, the fund offers a diversified portfolio that taps into growth opportunities across multiple manufacturing sectors, both old and new. The strategy balances between growth and value investing, ensuring exposure to companies that offer short-term momentum as well as long-term value.

Why Invest in LIC MF Manufacturing Fund?

The manufacturing sector in India is undergoing a transformation, driven by government initiatives such as Make in India and the Production Linked Incentive (PLI) scheme. These initiatives aim to boost local manufacturing, reduce imports, and encourage the production of high-tech goods. The LIC MF Manufacturing Fund is uniquely positioned to capitalize on these opportunities by investing in sectors and companies that are expected to benefit from this growth.

Broad Sector Coverage

The fund’s investment strategy covers a broad spectrum of the manufacturing industry, from traditional manufacturing companies to those engaged in cutting-edge technology. Key sectors include:

• Traditional manufacturing industries like automobiles, textiles, and engineering.

• Companies in the technology and electronic manufacturing sectors.

• Firms benefiting from government support through schemes like PLI.

Diversified Investment Strategy

The fund follows a top-down and bottom-up approach to stock picking. This method ensures that sectors with high growth potential are identified, and within these sectors, the best-performing companies are selected for investment. The fund balances both growth and value investment strategies, ensuring that the portfolio remains well-diversified across different sub-sectors of manufacturing.

Important Dates of LIC MF Manufacturing Fund

The NFO (New Fund Offer) period presents a great entry point for investors, offering a chance to invest at the initial stage. After the NFO closes, the fund reopens for continuous sale, allowing investors to buy units on a regular basis.

Asset Allocation and Investment Approach

The LIC MF Manufacturing Fund’s asset allocation is primarily focused on equity and equity-related instruments of companies in the manufacturing sector. Here is a breakdown of the asset allocation strategy:

This allocation strategy allows for diversification within the manufacturing theme while offering some exposure to debt and money market instruments to manage risk.

What is the exit load structure?

Exit Load:

• No exit load for up to 12% of units if redeemed or switched within 90 days.
• For units exceeding 12%, a 1% exit load is levied.
• After 90 days, no exit load is applicable, making it easier for investors to exit without penalties after the first three months.

The exit load structure encourages long-term investment but offers flexibility for partial withdrawals within the initial period.

Minimum Investment Requirements

Investors can choose between lump-sum investments or systematic plans:

Lump-sum Investment:

• Minimum of ₹5,000 and multiples of ₹1 thereafter.

Systematic Investment Plan (SIP):

The SIP option is particularly attractive for those who prefer smaller, regular investments, making the fund accessible to a broader audience.

First Tier Benchmark Index

The fund’s performance will be benchmarked against the Nifty India Manufacturing Index (TRI), which provides a comprehensive reflection of the manufacturing sector’s performance in India.

Investment Plans and Options

The LIC MF Manufacturing Fund offers two primary plans:

1. Regular Plan: For those who prefer to invest through distributors.
2. Direct Plan: For investors who want to invest directly with LIC Mutual Fund without intermediaries.

Both plans will follow a common portfolio, but the key difference lies in the expense ratios, with direct plans typically offering lower costs.

Additionally, investors can choose between:

• Growth Option: Suitable for those seeking capital appreciation without periodic payouts.
• Income Distribution cum Capital Withdrawal (IDCW) Option: This allows investors to receive income distributions either in cash or through reinvestment.

For investors who do not specify a preference, the default option is the Growth Option, while the default sub-option for IDCW is Reinvestment.

Fund Managers: Experienced Hands at the Helm

The LIC MF Manufacturing Fund is managed by two experienced fund managers, Mr. Yogesh Patil and Mr. Mahesh Bendre. With extensive experience in managing equity portfolios, they bring a wealth of expertise in identifying high-potential companies within the manufacturing sector. Their active management approach ensures that the portfolio is periodically reviewed and adjusted to maximize returns while minimizing risks.

Special Features and Products

The LIC MF Manufacturing Fund offers a range of special products to cater to different investor needs:

• Systematic Investment Plan (SIP): Includes options like SIP Pause and SIP Step-up, giving investors flexibility to adjust their investment amounts over time.

• Systematic Transfer Plan (STP): Allows investors to systematically transfer amounts between different schemes.

• Systematic Withdrawal Plan (SWP): Enables investors to withdraw a fixed amount periodically.

• Auto-Switch Facility: Allows for automatic switching between schemes under specific conditions.

Special Facilities for Investors

The fund also offers several convenient features:

• Online Platforms: Investors can transact via the AMC website, MF Central, MF Utilities, and stock exchanges like NSE and BSE.

• Dividend Transfer Facility: Dividends can be transferred between accounts, adding flexibility for income-focused investors.

• Registrar and Transfer Agent Platforms: These platforms ensure seamless transactions and management of investor accounts.

Why Now is the Right Time to Invest in Manufacturing?

India’s manufacturing sector is at an inflection point. Several factors contribute to the sector’s bright future:

• Government Initiatives: Programs like Make in India and the PLI Scheme are driving investments and growth in the manufacturing sector. These initiatives aim to increase India’s share in global manufacturing and reduce dependency on imports.

• Technology Adoption: With advancements in technology, Indian manufacturers are increasingly adopting new-age solutions like automation, robotics, and AI, making the sector more efficient and globally competitive.

• Shift in Global Supply Chains: The global supply chain realignment post-pandemic presents a unique opportunity for India. Companies are looking to diversify their supply chains, and India, with its large talent pool and improving infrastructure, is well-positioned to benefit from this shift.

Risk Factors and Considerations

the LIC MF Manufacturing Fund offers exciting growth opportunities, it is not without risks. The Riskometer for the scheme indicates a very high-risk level, primarily due to the fund’s concentrated focus on the manufacturing sector. Market volatility, changes in government policies, and global economic factors can all affect the performance of companies in this sector.

Investors are advised to consult with their financial advisors to determine if this fund aligns with their risk tolerance and financial goals.

Read this PDF to see details of LIC new NFO

Conclusion

The LIC MF Manufacturing Fund presents a compelling investment opportunity for those looking to capitalize on the growth of India’s manufacturing sector. By investing in companies that are driving innovation, expanding exports, and benefiting from government policies, this fund offers the potential for significant long-term capital appreciation.

As India positions itself as a global manufacturing hub, now is the time for investors to participate in this growth story. With its diversified portfolio, experienced management, and strong focus on sectors poised for growth, the LIC MF Manufacturing Fund is an excellent choice for those looking to build wealth through equity investments in manufacturing.

However, as with all investments, due diligence is essential. Investors should carefully consider their risk appetite and investment horizon before investing in this high-risk, high-reward fund.

FAQs for the LIC MF Manufacturing Fund

Disclaimer: Mutual fund investments are subject to market risks. Investors should read all scheme-related documents carefully before investing.