Baroda BNP Paribas Mutual Fund launched Baroda BNP Paribas Nifty Bank Exchange Traded Fund (ETF), a thematic equity mutual fund replicating the performance of the Nifty Bank Total Returns Index.
The Bank Nifty ETF will provide investors with exposure to the top 12 banking companies in India in terms of market capitalisation. The NIFTY BANK Index has shown a 15 per cent annual growth rate over the last 10 years, the release said.
NFO Details
The fund opened for subscription today May 31, 2024. Today its ETF units are issued in dematerialised form and listed for trading on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The minimum lumpsum investment is Rs. 5,000 and in multiples of Re. 1 thereafter. There is no exit load involved in the scheme.
Exchange Traded Funds (ETFs) are passive mutual fund schemes that track the performance of an index or commodity. They invest in stocks or bonds and are listed on stock exchanges, thus providing investors the opportunity to buy and sell them. ETF units are priced at a fraction of the index or commodity that they hold. With no active fund manager involvement, they have lower management costs.
Suresh Soni, CEO, of Baroda BNP Paribas AMC, said, "Indian banking sector has shown robust growth and is well placed to continue its upward trajectory as a leading sector for our economy. "
Investment Consideration
The Nifty Bank Total Returns Index includes 12 of the largest banks listed on the National Stock Exchange. This fund by maintaining investment as per Nifty Bank Total Returns Index ensures diversification by limiting the weight of a single stock to 33 per cent and the top three stocks to 62 per cent. The index is updated in March and September of every year, and only includes stocks that are part of the Futures & Options segment, the release said.
The index shows a 15 per cent annual growth rate over the last 10 years and 17 per cent annual growth over the last 15 years as of April 30, 2024, the release said. As of the same date, the index has delivered positive returns in over 75 per cent of all calendar years and outperformed the Nifty 50 in 14 out of the last 22 calendar years.
An investor investing for a random 7-year holding period in the last 24 years could have achieved greater than 10% CAGR returns, 97% of the time with no negative returns.
