Why Invest in Innovative Businesses?

Historically, adoption of innovative strategies has repeatedly proven to be transformative, driving societal progress and significantly boosting economic growth. The concept of innovation has become increasingly vital in today’s fast-evolving landscape. In the current dynamic environment, innovation is no longer optional—it is a core driver of sustainable business success and long-term value creation.

Why Innovation is important?

Innovation has had a Positive Impact on Economic Growth. Countries that adopted innovative strategies in different sectors / segments have witnessed a multiplier effect on Real GDP growth in different periods.

Source: International Monetary Fund, Statista, The World Factbook by CIA, US Bureau of Economic Analysis, Federal Reserve of St. Louis, Our World in Data by Oxford, Toyota, Research Publication by University of Sussex, University Publications, Publication by Kia Economic Research Institute

Innovative businesses tend to grow at a much faster pace

Source: Bloomberg

*EPS: Earnings per Share; Data for EPS as of December 2024; Years indicate Calendar Year-end years

Innovative businesses create wealth over the long term

Source: Bloomberg.

Even in India, Sunrise Sectors have grown disproportionately

Source: www.niftyindices.com (Capturing the Pulse – July 2024), NAASCOM, Industry Reports;

**ERP: Enterprise Resource Planning

How to participate in Innovative businesses?

One can consider investing in HDFC Innovation Fund. The Fund aims to invest at least 80% of its net assets in equity and equity related instruments, which focuses on companies that are adopting innovative themes and strategies. The Fund has well defined methodology for selecting innovative companies and is a pure play on innovation theme.

Based on the methodology, the eligible universe would include following sectors: