Axis asset management has just launched its latest NFO, the AxisBanking Exchange Traded Fund (ETF). The fund aims to track the Nifty Bank Index which comprises the largest banks in the country. The fund closes on 29 October 2020, and here’s what it’s all about.
|Good to know
Since the composition of an index changes little over time, ETFs require lesser ‘management’ than a mutual fund that tries to beat market returns. Hence, it’s called a passive investment instrument. That’s also why ETFs are generally less expensive than ordinary mutual funds.
As of 30 September 2020, banking and financial service industry (BFSI) shares have returned a 13.6% growth in a five-year window, and a 13.3% growth in a 10-year window respectively. Both figures are the highest among all the sectors that constitute benchmark indices in India.
It’s also worth noting that the weight of banking stocks is among the highest in the country’s benchmark market indices which proves how important they are to the markets. For instance, at 33%, banking and financial stocks have the largest share in the Nifty50.
Crucially, in addition to traditional banking services, many banks in India offer financial services such as mutual funds, insurance, brokerage services and even investment banking. Scaling up of such services could prove to be growth opportunities for investors. These are some of the reasons why the fund house intends to invest in the banking segment.
The Asis Banking ETF will invest in the twelve banks that comprise the Nifty Bank index. These are the largest (by market capitalisation) and most highly traded banks listed on NSE. Furthermore, being an ETF, this is arguably among the most low-cost options to invest in these banks.
|Instrument||Indicative Allocations (% of total assets)||Risk Profile|
|Equity instruments covered by Nifty Bank Index||95||100||High|
|Debt & Money Market Instruments||0||5||Low to medium|
|Name||Axis BankingThe ETF|
|Type||An open-ended scheme replicating the NIFTY Bank Index|
|Investment objective||To provide returns before expenses that closely correspond to the total returns of the Nifty Bank Index (subject to tracking errors)|
|Benchmark||Nifty Bank TRI Index|
|Minimum application amount||₹5,000 and in multiples of ₹1/- thereof.|
|Additional application amount||No minimum additional amount. Units are purchased /sold in round lots of 1 unit on the stock exchange.|
|Expense ratio||Upto 1%|
|This product is suitable for investors who are seeking*:
*Investors should consult their financial advisors if in doubt about whether the product is suitable for them.
Note: The above information has been sourced from the Scheme Information Document provided by Axis Asset Management Company Limited. To read the entire document, click here.
The above article is purely academic in nature and aims to provide knowledge about basic trading concepts & should not be construed as an opinion or advice to invest or trade.
RKSV Securities India Private Limited (brand name Upstox) is the distributor of the mutual fund.
Mutual fund investments are subject to market risks; please read all the related documents and/or consult your investment advisor before investing.
Past performance of an investment asset does not guarantee future returns.