Union Innovations and Opportunities Fund: Strong outperformance

The Union Innovation and Opportunities Fund was launched in September 2023 and will soon complete 2 years. Since its inception, the fund has given a return of 20.8% beating its benchmark index Nifty 500 TRI (as on 21^st August 2025). In this article we will discuss about the innovation theme and review Union Innovations and Opportunities Fund.

Meaning and Scope of innovation

Innovation is the ability to create new products/ ideas, services, processes or improving on some existing models. Innovation has shaped the progress of human civilization since the earliest days. From the discovery of fire to the invention of wheels, the use of metals, the industrial revolution and computers, innovation has been the bedrock of technological advancement. Therefore, the scope of innovation is all pervading. Innovation can be a part of advancement in areas as diverse as financial services, processes, or consumer markets. Any technological advancements, development of new and improved ideas, products and services are all indicative of innovation.

What is innovation-based thematic investing?

Today’s competitive landscape heavily relies on innovation. Businesses that make innovation an integral part of their business processes, can improve their market share, increase their productivity, revenues and profits.

Investing in Innovation theme, refers to a focus on companies that use innovative solutions to create new markets. This increases market share or enlarges an existing market. Investing in Innovation as a theme has the scope to touch all types of companies and benefit from them. Investment in innovation theme is gaining increasing popularity with global retail and institutional investors over the past few years.

Innovation is a diversified investment theme

Many investors only associate technology with innovation. The Nifty 500 comprises of the most innovative listed companies in India. If you look at the sector composition of the Nifty 500, which is also the benchmark of the Union Innovations and Opportunities Fund, you will see that companies in India, have benefitted from innovations across different industry sectors: innovators were spread across different sectors like tech, consumer discretionary, healthcare, telecom, industrials, consumer staples etc.

India is at an Inflection point of Innovation

India is on the cusp of a ground breaking innovation era, driven by its thriving start up ecosystem, cutting-edge technologies like AI and fintech, and favourable government policies. With a young, dynamic workforce and increasing global investments, innovations across sectors like healthcare, renewable energy, and digital infrastructure are flourishing.

Government support for innovation

• 10,000 Atal Tinkering Labs (ATL). 1.1 crores+ students actively engaged in ATLs.


• 72 Atal Incubation Centres. 32,000 jobs created


• 3,500+ startups supported. 1,000+ women led startups


• 6,200+ mentors of change


• 14 Atal Community Innovation Centres


• 24 Atal New India challenges


• 40+ domestic and international partnerships

Source: https://aim.gov.in/.

Union Innovations and Opportunities Fund

Union Innovations and Opportunities Fund invests in companies across large, mid and small caps freely depending on market trends and the fund managers discretion. The fund is thematic with a focus on stocks demonstrating growth and quality at reasonable valuations. The fund is co-managed by Mr. Gaurav Chopra (since November 01^st, 2024) and Mr. Sanjay Bembalkar (since inception of the fund).

Wealth Creation with Union Innovations and Opportunities fund (Regular Growth Option)

If you had invested Rs 10 K as monthly SIP in the fund since its inception, the corpus would have grown to Rs 2.66 lakhs at an XIRR of 16% (as on 31^st July 2025)

Source: NSE; Advisorkhoj research as on 31^st July 2025

If on the other hand you had invested Rs 1 Lakh as a lumpsum in the fund, then your corpus would have grown to Rs 1.4 lakhs giving a CAGR of 19.73% (Source: NSE; Advisorkhoj research as on 30^th July 2025)

Consistent Returns: Rolling Returns

The fund has outperformed its benchmark since its inception. See below the charts representing the 1-year rolling returns of the fund Vs its benchmark index.

Source: NSE; Advisorkhoj research as on 21^st August 2025

Investment philosophy of Union Innovations and Opportunities fund

The portfolio of the fund is constructed with the belief that while a top-down view is necessary, it’s not a substitute for bottom-up stock-picking Identification of superior growth, compounded over long periods of time, within an appropriate valuation framework, is the primary way in which the fund managers seek to add value to the client portfolios.

Investment Process of the fund

The Investment process is divided into two parts viz:

1. Stock Research Process: It includes new stock selection and monitoring the existing stocks. The fund managers select stocks based on in depth research and business identification. The areas of focus are companies with new products or services, new processes or technology, businesses experiencing favourable shifts in the demand curve, or companies with some new business models. The flow of Research process is a funnel-like structure with multiple sieves various aspects in a sequence like macros, government policies, regulations, global events, judicial and political actions amongst others are examined. (See graphic below) The extent of time and efforts expended on a particular idea is a function of how many filters the idea qualifies through.
   
   

   

   Source: Union MF product presentation



2. Portfolio Management: This part is based on research; portfolio is constructed and rebalanced.
   
   

   

   Source: Union MF product presentation

Stock Classification

The stocks in a portfolio can be classified into categories where each one has a specific role and may have the potential to meet certain expectations in terms of delivery. The portfolio is created using a mix of carefully selected stocks of innovative companies from all or any categories.

Apart from strategic, tactical and option stocks, the fund may also invest in defensive stocks. These stocks are generally big benchmark stocks where investment manager has low conviction about their outperformance. However, not owning them at all may be deemed too risky from relative performance standpoint. These are generally neutral or underweight relative positions.

Current Portfolio Positioning

Source: Union MF Fund Factsheet as on 31^st July 2025

Who should invest in the Union Innovation and Opportunities Fund?

The fund is suitable for investors who are:

1. Well informed and experienced.


2. Want specialized exposure to disruptive and innovative companies


3. Want to participate in India’s growth story.


4. Wish to diversify their portfolio


5. Have a very high-risk appetite

Consult your advisor or a mutual fund distributor to find out how the Union Innovation and Opportunities fund can be suitable for your portfolio.