MUMBAI: SBI Mutual Fund will launch a consumption exchange traded fund (ETF) which will track the Nifty India Consumption Index. The new fund offer (NFO) for the ETF will run from 30 June to 14 July. Being an ETF, one will be also able to buy and sell its units on the exchanges thereafter. You need a demat and trading account in order to invest in ETFs.
The NIFTY India Consumption Index is designed to reflect the behaviour and performance of a diversified portfolio of companies representing the domestic consumption sector which includes consumer non-durable companies, healthcare, auto, telecom services, pharmaceuticals, hotels, media & entertainment. The NIFTY India Consumption Index comprises 30 companies listed on the National Stock Exchange (NSE). Its top 5 constituents are Hindustan Unilever (HUL), ITC, Asian Paints, Bharti Airtel and Maruiti Suzuki India. The index has delivered a return of 36.04% over the past year–as of 31 May–and 11.45% over the past 5 years. However returns have been volatile and bunched up over a few years. The index gave 19% returns in 2020, -1% in 2019, -2% in 2018, 45% in 2017 and -2% in 2016.
Mr. Vinay M. Tonse, MD & CEO, said, “We believe passive funds are gaining traction around the world and in India as well where investors would like to invest in line with an index. Investments in ETFs are beneficial for those looking to get exposure to a broad range of asset classes at a lower cost. With the addition of SBI ETF Consumption, we continue to augment to our portfolio of offerings in the passive investment space, in addition to our actively managed funds. I believe SBI ETF Consumption is a good opportunity as India’s potential for domestic consumption is very large and continues to be a strong growth story.”
DP Singh, chief business officer, said, “Among the passive investment options, ETFs provide many benefits to investors such as diversification, liquidity, low cost, simplicity and transparency. Consumption has grown consistently over the last few decades and is expected to provide value to investors in the long term as well. We will continue to expand our offerings to help investors achieve their investment goals and provide them access to similar fast-growing themes.’’
The minimum application amount, during the NFO period, is Rs5,000 and in multiples of Re1 thereafter.
The Fund Manager for SBI ETF Consumption is Harsh Sethi who also manages SBI ETF IT and SBI ETF Private Bank.
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