DSP Mutual Fund Launches Three Open-Ended ETFs, NFO Open

DSP Mutual Fund on July 17, 2023, announced the launch of three open-ended exchange traded funds (ETFs).

DSP S&P BSE Sensex ETF will replicate and/or track the S&P BSE Sensex Index and offer investors the opportunity to invest in the Indian market. DSP Nifty Private Bank ETF will replicate and/or track the Nifty Private Bank Index, thus offering investors a long-term structural growth story in Indian private sector banks. The third fund, DSP Nifty PSU Bank ETF will replicate and/or track the Nifty PSU Bank Index and offers investors a tactical bet on a revival in public sector banks.

The new fund offer (NFO) for the three funds opened for subscription today, July 17, 2023, and will close on July 21, 2023. The minimum investment amount in all the three schemes is Rs. 5,000 and in multiples of Re. 1

Anil Ghelani, CFA, head – passive investments & products, DSP Mutual Fund said in a statement that the India growth story has given rise to many opportunities for investors for a successful long-term investing experience.

“Our offerings in the ETF space give investors the choice to do so by tracking the broader market passively at a relatively lower cost to achieve their financial goals, ride the strong structural growth story of private sector banks or benefit from a likely re-rating of PSU banks depending on their financial plan and risk tolerance,” he said.

According to DSP Mutual Fund, the funds are suitable for investors who are seeking long-term capital growth along with investment in equity related securities covered by these indices.

The DSP S&P BSE Sensex ETF will provide investors with an opportunity to invest in the top-30 companies of India. The S&P BSE Sensex has grown by a whopping 122 times in the last 37 years, DSP Mutual Fund said. In addition, companies forming part of the S&P BSE Sensex index comprise nearly 40 per cent of the total Indian equity market listed on the exchange, it added.

Regarding private banks, DSP Mutual Fund said that the private sector banks in India have gone through a structural growth story and their market share has also doubled in the last two decades. Their balance sheets have also become stronger and they have been well capitalised to support continued deposit and credit growth, it said.

“Their financial ratios have also been rising sharply since the past three years, while their valuations are at an attractive level compared to their historic average. Credit and deposit growth for private banks have also been growing at a strong rate while net non-performing assets (NPAs) are an eight- year low,” DSP Mutual Fund said in a statement.

“For PSU banks, their revival story may have just started with PSU banks outperforming private banks for the last three years. PSU banks have also seen an improvement in their net interest margins from falling NPA and higher recoveries. PSU bank mergers have also strengthened their balance sheet and

credit growth. The current valuations of PSU banks are also below its historical average. Given its increasing return on assets, the sector looks poised for a re-rating,” it added.