Just pause and rewind,
What if you had invested in Infosys back in the 90s, before anyone had even heard of “tech stocks”? Or what if you saw Tata Motors shifting gears into electric vehicles when most people thought it was just another car company? These were not just business expansions; these were the bold moves of innovation of the companies.
Today, Indian investors have a new way to be part of such forward-looking opportunities, through innovation-themed mutual funds. But what makes now the right time to invest in innovation and why is India uniquely positioned to lead this change?
Why India and Why Now?
India has confidently climbed the ladder of global innovation. Since 2015, we’ve moved from rank 81 to 39 in the Global Innovation Index. We’re now the third-highest in the world for unicorn startups and seeing a sharp rise in patent filings, deep-tech startups, and AI talent.
Across sectors, India is witnessing a wave of transformation:
- EV adoption is rising sharply, especially in two-wheelers, which now command over 5% share.
- UPI and fintech platforms have dramatically changed how Indians transact and invest.
- Pharma companies are stepping into original drug discovery and biotech.
- Digital infrastructure—like ONDC, CoWIN, and Aadhaar- is laying the groundwork for scalable innovation.
- Green hydrogen, solar power, and battery manufacturing are scaling up faster than ever.
What makes this even more compelling is India’s cost advantage. With a vast pool of graduates and narrowing global salary gaps (on a purchasing power basis), our country is not just producing ideas, it’s turning them into scalable businesses faster and more affordably than many developed markets.
Performance & Long-Term Potential:
While innovation funds are relatively new in the Indian market, early performance suggests their potential. Between September 2023 and June 2025, several innovation-focused funds, including those by Axis, ICICI Prudential, Union, and Nippon India, outperformed the broader market benchmark, the Nifty 500.
While these funds may remain sensitive to global macroeconomic shifts in the short term, the long-term outlook is compelling. Indian companies are increasingly integrating advanced technologies, scaling digital capabilities, and innovating across sectors to compete globally. This structural shift makes the innovation theme not just timely, but potentially transformative.
As domestic demand grows for smarter, cleaner, and more efficient solutions, the market capitalization of forward-thinking companies is expected to rise significantly. For investors with a long-term horizon, innovation funds offer a promising avenue to participate in India’s next phase of growth.
Current Opportunity – HDFC Innovation Fund NFO
The HDFC Innovation Fund is built around a simple but powerful idea: invest in the businesses that are creating the future. Whether it’s electric vehicles transforming how we move, clean energy powering our homes, or biotech pushing the boundaries of healthcare, this fund aims to capture the spirit of innovation that’s rising across India. Backed by a strong research framework and a carefully selected portfolio of forward-thinking companies, it offers investors a chance to participate in India’s next wave of transformation as early believers.
What sets it apart is;
Its growth-oriented allocation, with a significant portion invested in small and mid-cap companies that are often at the cutting edge of innovation. Unlike most traditional equity funds, this one will avoid heavy exposure to large financial companies. That’s a conscious decision, rooted in the belief that true innovation is more likely to come from emerging business models rather than legacy institutions.
The HDFC Innovation Fund will be managed by Amit Sinha and Dhruv Muchhal, both seasoned professionals with deep experience in equity research and fund management. Their expertise lies in identifying high-growth businesses and navigating sectoral shifts with a long-term, quality-focused investment lens.
But is an innovation fund right for you?
This is a thematic fund and like most themes, it rewards those with conviction and patience. It’s best suited for investors who:
- Believe in India’s long-term innovation story,
- Are comfortable with short-term volatility,
- Can stay invested for at least 5–7 years,
- Want to diversify into high-growth, high-potential sectors
The HDFC Innovation Fund NFO opens on 27th June 2025 and closes on 11th July 2025. For investors who believe in India’s future and are ready for long-term growth, innovation funds offer a smart way to back the ideas shaping tomorrow. If you feel this fund should be a part of your portfolio, contact us at 9845093554 and ask for Ravi.