In an innovation of sorts, IDFC Mutual Fund has launched GDP Growth Fund, a scheme that provides investors the opportunity to invest in the India growth story by mirroring investments in thevarious components of growth.Thus, the fund would endeavour to follow economic growth of the country by investing its corpus in different gross domestic products (GDP), such as industry, services and agriculture, in the same proportion as their contribution to overall GDP.Accordingly, going by the present trend, 8 per cent of the total corpus would be allocated to stocks of companies having business related to agriculture, 71 per cent in services and the remaining 26 per cent in industries. IDFC has pinned its hopes on India growing at a higher pace compared with other countries across the globe.The fund, however, comes at a time when the economic growth of the country has slowed with GDP projections being successively lowered to a little over 7 per cent for the present fiscal year by the Union government. The new fund offer period was open for subscription from January 28 to February 26, 2009. The face value of new issue is Rs 10 per unit.Mutual fund industry players say that IDFC Mutual Fund might not have an easy ride with the fund, especially at this point.“It is not easy to mirror the GDP as the new scheme of IDFC fund envisages. There are not many great performers in the agriculture sector and getting right stocks in optimum proportion would not be easy. Also, not all the sectors of the economy would perform in a similar manner at any given point and hence the fund has to remain invested in a particular sector in a particular proportion and this is a negative of the new fund,” Ashish Kapur, chief executive officer, Invest Shoppe, a broker of mutual fund products, said.“There are other mutual funds that offer schemes that have similar features. Under the present circumstances, investors might be wary of betting on a new fund rather than investing in tried and tested one,” a head of a mutual fund house, who did not wish to be named, said.The new fund offers both growth and dividend options. The minimum investment amount is Rs 5,000 and in multiples Re 1 thereafter. The fund will charge an entry load of 2.25 per cent for the investment amount less than Rs 5 crore.
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