Kotak PSU Bank ETF

About Kotak Nifty PSU Bank ETF

• Kotak Nifty PSU Bank ETF is an open-ended value-oriented equity scheme that belongs to Kotak Mutual Fund House.

• It includes stocks of public sector banks in India.

• Kotak Nifty PSU Bank ETF was launched on November 8, 2023.

• The scheme’s total assets under management (AUM) stood at ₹1,477 crore as of June 30, 2024.

• Devender Singhal and Satish Dondapati have been managing the fund of Kotak Nifty PSU Bank ETF.

• The fund is traded on both stock exchanges which enables investors to trade at market price during each session.

• The ETF units are listed and one can invest by buying them through a demat account with a registered broker.

Investment Objective & Benchmark

• The investment objective is to provide returns that correspond to the total return of the underlying index, subject to tracking errors.
• It is benchmarked against Nifty PSU Bank TRI.
• The ETF invests in the same proportion of stocks as are included in the Nifty PSU Bank Index.
• The risk level of this scheme is very high and it is suited to investors looking at a long-term wealth creation goal.
• It represents the companies selected based on float-adjusted market capitalisation, weightage of stock in the index and liquidity.
• The ETF follows a passive investment approach.
• The need for financial services and loans is projected to grow in India with the rising income level and infrastructural spending.
• Public sector banks have managed to improve their NPAs and other metrics by implementing stringent regulation over the past few years.

Asset Allocation & Portfolio Composition

• The ETF holds 98.79% of its assets in banking stocks, with the remaining 1.2% in net current assets.
• The ETF invests funds in companies across market capitlisations – 67.22% in giant cap, 13.93% in large cap, 14.87% in mid cap and 3.98% in small cap.
• The top 10 company holdings constitute over 95% of the scheme’s asset allocation.

Top 10 Holdings in stocks of this ETF include:

• State Bank of India: 32.81%
• Bank of Baroda: 15.8%
• Canara Bank: 12.7%
• Punjab National Bank: 11.86%
• Union Bank of India: 8.44%
• Indian Bank: 6.18%
• Bank of India: 4.79%
• Bank of Maharashtra: 2.08%
• Indian Overseas Bank: 1.57%
• Central Bank of India: 1.24%

The ETF has delivered a return of 61.86% as of July 30, 2024, compared to the underlying index's yield of 62.58% during the period.

Since its Inception, the ETF has given an annualised return of 6.57%.