HDFC Mutual Fund has launched the HDFC FTSE India Equity ETF, with its New Fund Offer (NFO) open until October 7, 2026. The new passive scheme tracks the FTSE India Equity Index, providing investors with exposure to a basket of 276 domestic stocks. Since this is an exchange-traded fund, investors should note that performance depends on the underlying index and market demand, and it requires a demat account to trade after the NFO concludes.
HDFC Mutual Fund has introduced the HDFC FTSE India Equity ETF, a new passive investment product designed to track the performance of the FTSE India Equity Index. The fund is currently in its New Fund Offer (NFO) period, which began on September 23, 2026, and will remain open until October 7, 2026. By tracking a broad index of 276 domestic stocks, the scheme aims to mirror the market's performance rather than rely on active stock picking by fund managers.
Investment Strategy and Structure
The fund’s core objective is to replicate the FTSE India Equity Index, which is composed of stocks selected based on their free-float market capitalization and specific foreign ownership limits. The index undergoes a semi-annual review process, and constituent weights are adjusted quarterly to ensure the portfolio remains balanced. The fund will be managed by Abhishek Mor and Arun Agarwal. Investors can participate in the NFO with a minimum investment amount of ₹500, with further investments possible in increments of ₹1.
Unlike traditional mutual funds where units are purchased directly from the asset management company, this is an exchange-traded fund (ETF). This means that once the NFO closes and the units are listed, they will trade on stock exchanges like the NSE and BSE. Investors will need a demat account to buy or sell these units during trading hours. The price at which units are bought or sold on the exchange will depend on market demand and supply, which may sometimes cause the ETF to trade at a premium or discount to its actual Net Asset Value (NAV).
Risks and Monitorables
Because this is a passive fund, its returns are intended to match the underlying index. However, investors should be aware of the concept of tracking error. This occurs when the fund's returns deviate slightly from the benchmark index due to management expenses, cash holdings, and the time taken to rebalance the portfolio. While the fund aims to invest at least 95% of its assets in the index's constituent securities, a small portion may be held in debt and money market instruments to manage day-to-day liquidity.
There is no guarantee that the investment objective will be achieved. As with all equity-based products, the value of the investment will fluctuate based on the performance of the underlying 276 stocks within the index. Investors should monitor the fund’s tracking error and liquidity levels on the exchange once it begins trading. The performance of the fund will be measured against the FTSE India Equity Index (Total Return Index), which accounts for both capital appreciation and dividend income from the underlying stocks.