NFO Alert: Tata Mutual Fund launches the Tata Nifty Financial Services Index Fund; all you need to know

Tata Mutual Fund announced the launch of the Tata Nifty Financial Services Index Fund. The scheme opened for public subscription on April 08, 2024, and will close on April 22, 2024. The scheme re-opens for ongoing sale and repurchase on April 30, 2024.

What kind of mutual fund scheme is this?

This is an open-ended scheme replicating/tracking the Nifty Financial Services Index.

What is the main objective of investing in this fund?

The investment objective of the scheme is to provide returns, before expenses, that commensurate with the performance of the Nifty Financial Services Index (TRI), subject to tracking error. There is no assurance or guarantee that the investment objective of the scheme will be achieved. The scheme does not assure or guarantee any returns.

This fund aims to replicate the NIFTY Financial Services Index (TRI), offering exposure to a diverse range of financial services companies poised for potential growth.

The Indian banking industry is currently witnessing remarkable growth, underscored by its strong asset quality and robust performance metrics. With a low default rate of 2.9%, attributed to minimal Gross Non-Performing Assets (GNPAs), the sector showcases resilient asset quality. Notably, the industry has experienced significant credit growth at 21%, coupled with a commendable 14% growth in deposits, reflecting a healthy financial ecosystem.

Furthermore, the increasing adoption of digital banking services is evident, with a notable 57% year-on-year growth in Unified Payments Interface (UPI) volume. (Source: BCG Banking Sector Roundup 9MFY24).

How may one invest in this scheme?

Investors can invest under the scheme with a minimum investment of ₹5000 per plan/option and in multiples of Re 1. There is no upper limit for investment.

Under normal circumstances, the asset allocation of the scheme will be as follows:

Are there similar mutual funds in the market?

To date, no asset management company has launched any such fund that tracks the Nifty Financial Services Index Fund.

How will the scheme benchmark its performance?

The performance of the scheme is measured against the NIFTY Financial Services Index (TRI). 

As per the investment objective of the scheme, the investment would primarily be in securities which constitute the Nifty Financial Services Index. Thus, the composition of the aforesaid benchmark index is such that it is most suited for comparing the performance of the scheme. The performance of the scheme shall be benchmarked to the Total Return (TRI) variant of the benchmark. 

Are there any entry or exit loads to this scheme?

This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” would be calculated as under:

• 0.25 % of the applicable NAV, if redeemed on or before 15 days from the date of allotment.

Who will manage this scheme?

Kapil Menon will be the fund manager for the scheme.

Does the fund contain any inherent risk?

The scheme involves “Very High Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their principal will be subject to very high risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.