Mirae Asset Mutual Fund announced the launch of an Exchange Traded Fund (ETF) investing in electric vehicles and the new automotive segment, namely ‘Mirae Asset Nifty EV and New Age Automotive ETF’. The fund house claims it is India’s first ETF tracking 'Nifty EV and New Age Automotive Total Return Index' and will invest in the scrips of electronic vehicle companies and their entire value chain.
NFO Details
The New Fund Offer (NFO) for this ETF runs from June 24, 2024, to July 5, 2024. In the scheme, the minimum initial investment during NFO will be Rs 5,000 with subsequent investments being multiples of Re 1.
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There is no exit load involved in the scheme.
Investment Philosophy
The portfolio will include scrips of electric vehicles, hybrid vehicles, and battery manufacturing units across market cap segments. Further, the fund house said the ETF will also try to leverage future technological disruptions by investing in scrips related to Hydrogen-fuel cells, autonomous vehicles, etc.
The ETF's portfolio will also include companies that have received Production Linked Incentives (PLI) in the automobile and battery segments. Further companies that participated in industry initiatives such as Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) will find a place in the portfolio.
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The total exposure to automobile manufacturers will be capped at 40 per cent when index rebalancing is done. So 60 per cent exposure will be in segments like auto ancillaries, battery, battery chemicals, automation and connectivity, etc.
Investment Considerations
Siddharth Srivastava, Head-ETF Products, Mirae Asset Investment Managers (India) Pvt. Ltd said, " This ETF will invest in companies that are at the forefront of electric vehicle and new automotive technologies across the value chain. It provides exposure to the rapidly evolving global and domestic themes in this innovative industry."
Battery prices are projected to drop 40 per cent from 2022 to USD 99 per kilowatt hour (kWh) of storage capacity by 2025. This reduction in battery costs could potentially make electric vehicles (EVs) as affordable as internal combustion engine (ICE) vehicles by the middle of the decade. Further India's battery demand is expected to reach 3,500 GW/h by 2030, the fund house said. The Production Linked Incentive (PLI) program aims to establish a battery manufacturing capacity of 50 gigawatt hours, with an investment of Rs 18,100 crore.
