Tata Asset Management says these six themes are where affluent investors are investing these days. NFO will remain open till April 22, 2024. Minimum investment is Rs. 5,000 and in multiples of Re. 1
Tata Asset Management on April 8, 2024 launched six thematic index funds. These index funds are Tata Nifty 500 Multicap 50:30:20 Infrastructure Index Fund, Tata Nifty MidSmall Healthcare Index Fund, Tata Nifty Realty Index Fund, Tata Nifty Financial Services Index Fund, Tata Nifty Auto Index Fund and Tata Nifty 500 Multicap India Manufacturing 50:30:20 Index Fund.
The construction of the indices involves criteria, such as market capitalisation, sectoral representation, and periodic reviews, Tata Asset Management said.
Index funds passively track the performance of a specific index and provide exposure to a diversified basket of stocks, mostly in a specific theme. As index funds don’t require individual stock selection, they offer transparency and cost-effectiveness compared to actively managed funds.
The new fund offer (NFO) for these six funds will run from April 8, 2024 to April 22, 2024. Investors can start investing in these index funds with a minimum investment of Rs 5,000 and in multiples of Re. 1 thereafter. The exit load is 0.25 per cent of the applicable net asset value (NAV), if redeemed on or before 15 days from the date of allotment.
Anand Vardarajan, business head, Tata Asset Management said these index funds will invest in areas where affluent investors are currently investing.
“It is instructive for an investor to see where money is being spent today. More often than not, where the rich spend today, the middle class may spend tomorrow. Rising auto demand with sustainability and green energy are powering the growth of this sector. Factories are operating at near-maximum capacity, indicating near peak production capacity spurring manufacturing growth,” Vardarjan said
Here are the details of the six funds.
Tata Nifty 500 Multicap 50:30:20 Infrastructure Index Fund: This scheme replicates the performance of the Nifty 500 Multicap Infrastructure Index with a strategic allocation ratio of 50:30:20 across large-, mid-, and small-cap companies. This fund presents an investment avenue for those seeking exposure in India’s infrastructure sector, the fund house said.
The index has caps, such as 50 per cent to large-cap, 30 per cent to mid-cap, and 20 per cent to small-cap stocks. The portfolio comprises the top 15 large-cap, top 25 mid-cap, and top 35 small-cap stocks, selected based on their 6-month average free float market capitalisation.
Tata Nifty MidSmall Healthcare Index Fund: Mirroring the Nifty MidSmall Healthcare Index, this fund aims to capitalise on robust margins in the healthcare industry.
“The healthcare industry presents potential opportunities driven by strong margins, stabilised pricing pressures in international markets, and increasing health awareness,” Vardarajan said in a statement.
The index selects a maximum of 30 stocks from the Nifty MidSmallcap 400 universe.
Tata Nifty Realty Index Fund: Tracking the Nifty Realty Index, this fund seeks to tap into the thriving real estate sector. Soaring residential demand, rapid sales velocity, and a resilient balance sheet post-Rera implementation can provide investors a suitable opportunity for investment, the fund house said.
Tata Nifty Financial Services Index Fund: Replicating the NIFTY Financial Services Index (TRI), this fund invests in a diverse range of financial services companies. With a low default rate of 2.9 per cent due to minimal gross non-performing assets (GNPAs), the Indian banking industry showcases resilient asset quality. Notably, the industry saw credit growth at 21 per cent, coupled with a commendable 14 per cent growth in deposits.
Further, the increasing adoption of digital banking services is evident, with a notable 57 per cent year-on-year (y-o-y) growth in Unified Payments Interface (UPI) volume, the fund house said.
Tata Nifty Auto Index Fund: Tracking the Nifty Auto Index, this fund seeks to leverage performance of the automobiles sector, which includes the manufacturers of cars, motorcycles, heavy vehicles, and auto ancillaries.
Favourable demographics, increasing disposable incomes, rapid urbanisation, and accessible credit are the encouraging factors for this sector, according to the fund house.
Tata Nifty 500 Multicap India Manufacturing 50:30:20 Index Fund: With India improving its ranking in the World Bank’s Ease of Doing Business, driven by initiatives such as GST implementation, performance-linked investment scheme, Rera policy, and digitalisation, the manufacturing landscape presents compelling opportunities for investors, Tata Asset Management said.
Robust residential demand, rapid sales velocity, and a resilient balance sheet post-RERA implementation offers room for growth in this space. The portfolio will comprise of top 15 large-cap, top 25 mid-cap, and top 35 small-cap stocks, selected based on their 6-month average free float market capitalisation, it further said in a statement.