Bandhan Mutual Fund on August 17, 2023 announced the launch of the Bandhan Nifty IT Index Fund.
The open-ended equity scheme will track the Nifty IT index, with an aim to capture the growth potential of the Indian Information Technology (IT) sector, Bandhan Mutual Fund announced in a press statement.
According to the scheme information document (SID), the scheme will replicate the Nifty IT index by investing in securities of the Nifty IT index in the same proportion and/or weightage with an aim to provide returns before expenses that closely correspond to the total return of Nifty IT Index, subject to tracking errors. However, there is no assurance or guarantee that the objectives of the scheme will be realised and the scheme does not assure or guarantee any returns, it added.
NFO Details
The new fund offer (NFO) will open on August 18, 2023, and close on August 28, 2023.
The minimum application amount is Rs. 1,000 and in multiples of Re. 1 thereafter in the lump sum mode. For systematic investment plan (SIP), the minimum investment is Rs. 100 and in multiples of Re. 1 thereafter for a minimum of six instalments. For systematic transfer plan (STP), the minimum investment is Rs. 100 and any amount thereafter.
There is no exit load. The benchmark is the Nifty IT TRI.
Investment in the Bandhan Nifty IT Index Fund can be made through licensed mutual fund distributors and online platforms, as well as, directly the bandhan mutual fund website, Bandhan Mutual fund said in the press statement.
Investment Strategy
According to Bandhan Mutual Fund, the product is suitable for investors who are seeking to create wealth over the long term and invest in equity and equity-related instruments belonging to Nifty IT Index.
The index offers stability and quality. There are quality companies that score favourably on environment, social, and governance (ESG) factors. There are also companies with high return on equity and high dividend payout. The IT sector has also been the leading sector in terms of 10-yr CAGR performance. It has also performed relatively better compared to the Nifty 50 across different, Bandhan Mutual Fund said in the SID.
Also, the recent underperformance has resulted in lower valuation, and current premiums are significantly lower than historical average. Lastly, the constituents of the Nifty IT Index are among the top 100 professional services companies in the world by market capitalisation, it added.
“The IT sector is a significant catalyst for the Indian economy, facilitating revolutionary changes across different segments such as banking, finance, education, healthcare, communication and connectivity, entertainment, automobile, and e-commerce. The Bandhan Nifty IT Index Fund is well-positioned to provide investors with a convenient, cost-effective route to benefit from the vast opportunities in this sector over the long term,” Bandhan Mutual Fund said in a press statement.
Vishal Kapoor, CEO, Bandhan AMC said, “The Indian IT sector is at the forefront of global innovation, establishing itself as a technology powerhouse and a leading player in the global IT landscape. Over the years, the Nifty IT Index has generated healthy returns for its investors delivering a handsome 17 per cent annual return over the last 10 years and outperforming major sectors.
Moreover, the valuation of the Nifty IT Index has eased over the last 18 months and is now closer to its historical average. Our latest offering, the Bandhan Nifty IT Index Fund combines the relative stability, quality and reasonable return visibility that this exciting sector offers.”
Risks
Being a sectoral fund, investors need to have relatively higher risk appetite for potentially higher returns. The fund has been rated in the very high category, which essentially means that that investors’ principal with be at a very high risk.
