For the first time in my life, I'm going to recommend - and recommend very strongly - that you invest in a fund that will not get you any returns. This lack of returns is not a likelihood but a certainty; this fund is designed to not give you any returns. The reason I'd like you to invest in this fund is that it's a charitable fund, with all returns going to the Indian Cancer Society. Not just that, the amount of your returns that flow to charity will be matched by the fund company, which is also not charging any expenses for running the fund.
This fund, called HDFC Charity Fund for Cancer Cure, has been launched by HDFC Mutual Fund and is open for investments till March 24, 2017. This is a closed-end fund and is basically an FMP. The tenure will be about three years and one month (1,136 days) and therefore your money will be locked-in till May 2020. This mutual fund is what is called a social-responsibility fund; the returns will be utilised by the Indian Cancer Society for the treatment of cancer victims who cannot afford the treatment. At the end of the investment period, you will get back the exact amount you have invested.
Although Value Research has never written about them, HDFC Mutual Fund had launched two such funds earlier. The first one was in 2011 and had assets under management of Rs 77 crore. The second one was in 2014 and had assets of Rs 175 crore. The two funds together have contributed about Rs 35 crore towards the treatment of cancer patients.
An integral part of the investment is the body that is managing the donated amount, the Indian Cancer Society (ICS). ICS was set up in 1951 by the famous oncologist Dr D J Jussawalla and Naval Tata (Ratan Tata's father). Dr Jussawalla was associated with the founding and running of a number of hospitals and charitable medical organisations in Mumbai during his lifetime. The donations from HDFC's charitable funds have so far been used to fund the treatment of 3,168 patients through Rs 80 crore of funds. The money is used to provide treatment to only those patients whose annual family income is less than Rs 1 lakh.
Donations made to this fund are eligible for deduction under Section 80G of the Income Tax Act. Of course, this will be applicable only to the dividend amount which actually goes into the donation and not for the entire invested amount. For corporates which are liable to spend on CSR (corporate social responsibility), these donations count as CSR expenditure. The entry bar for the fund is quite high - the minimum amount that one can invest is Rs 50,000. My guess is that investments in this fund will mostly be CSR expenditure by corporates.
The interesting part is that the AMC is matching the donations that are made out of investors' returns, effectively doubling the impact that your money will have. Very often, those of us who want to donate money don't because we are not sure of how to do so and whether our money will be utilised effectively. I feel that this fund enables many of us to donate a reasonable amount without running into those kinds of doubts. I myself am planning to invest in this fund. If you can afford to lose a little bit of income on some of your investments, then you should think of doing so, too.
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