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Product crack | HDFC Debt Fund for Cancer Cure

Product crack | HDFC Debt Fund for Cancer Cure
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First Published: Wed, Feb 16 2011. 11 57 PM IST

Updated: Wed, Feb 16 2011. 11 57 PM IST
Taking ethical investing to a new level, HDFC Asset Management Co. Ltd has launched a three-year closed-end debt scheme that will invest in scrips that mature a little before the scheme and then stay invested in them throughout the scheme’s tenor. Called HDFC Debt Fund for Cancer Cure (HDFCC), it is a capital-protection-oriented scheme that will be open for subscription only for a few days and will lock your money for three years. The fund has a tie-up with the Indian Cancer Society (ICS) and will enable its unitholders to donate either 50% or 100% of its proceeds towards helping the underprivileged cancer patients in their fight with the disease. The fund offers only dividend payout option; dividend reinvestment and growth options are not available.
What works
The timing of the launch is almost impeccable. With three-year debt scrips returning around 9.5% presently, the scheme aims to invest—and lock your money for the next three years—in high quality scrips that will return 9-9.5% per annum. To ensure that your returns (donations) are utilized well, the governing advisory council (GAC), comprising industry veterans and reputed doctors, is already in place at the ICS to monitor funds disbursement. It would overview HDFCC’s deployment, too. An independent auditor would be appointed to overview the decisions made by the GAC towards HDFCC.
What doesn’t
HDFCC is not a scheme you’d want to look at if you wish to make money for yourself. It’s an investment with a purpose; to donate money to cancer patients. As a result, the 50% dividend donation option doesn’t make any sense if, say, your fund earns 9% per annum. On the other hand, investors who would want to donate money to the ICS may find little incentive to go via HDFC Mutual Fund since you could also donate directly to institutions such as the ICS. A high minimum investment (Rs 1 lakh) may also act as a deterrent.
Mint Money take
Donating money to underprivileged cancer patients is a noble cause, especially since cancer treatment is expensive and many deserving patients from the lower strata of society cannot afford to pay. However, mixing investments with donation may not be such a good idea especially since the mutual fund industry itself has criticized the capital market regulator, the Securities and Exchange Board of India’s rule of entry load abolishment by saying that Indian investors aren’t yet mature enough to adequately compensate deserving distributors. In such a scenario, how the fund house expects the same investor to set aside Rs 1 lakh for three years and forgo dividend proceeds, remains to be seen. However, there’s no harm in investing for a good cause.
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First Published: Wed, Feb 16 2011. 11 57 PM IST