High-quality theme: Invest for minimum 5 yrs to offset valuation risk

MNC funds have struggled over the past year. The category declined by 5.7 per cent, compared with a 2.3 per cent gain in flexicap funds, over the past year.

- SARBAJEET K SEN

Despite this, Nippon India Mutual Fund has launched a new fund offer (NFO) for its MNC (multinational corporation) Fund, aiming to tap the long-term growth potential of the category.

"Thematic funds can display some divergence vis-à-vis the broader market in certain market phases. In the past one year, banking and financial services significantly outperformed the broader markets while themes like industrials, FMCG and consumer discretionary, which form a high percentage of MNC funds' portfolios, lagged," says Sailesh Raj Bhan, chief investment officer - equity investments, Nippon India Mutual Fund.

MNC funds invest a minimum of 80 per cent in companies with cross-border business interests, assets or operations. The Nifty MNC Index tracks 30 firms that have at least 50 per cent foreign promoter holding. Currently, eight MNC funds manage ₹17,563 crore in assets.

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