Aditya Birla Sun Life mutual fund introduced a new fund offer (NFO) for Nifty Financial Services ETF on July 14. The issue will remain open till July 27.
It is an open-ended exchange traded fund tracking Nifty Financial Services TRI. The minimum investment is ₹500 and further investment can be done in multiples of ₹100 thereafter during the NFO period.
The scheme is passively managed. It invests in those equity and equity related instruments that constitute the Nifty Financial Service TRI.
The constituents of the Nifty financial services are HDFC Bank, ICICI Bank, HDFC, Kotak Mahindra, SBI, Axis Bank, Bajaj Finance, Bajaj Finserv, HDFC Life Insurance Company, among others.
According to the portfolio concentration norms for exchange traded funds, the index of the scheme will have a minimum of 10 stocks as its constituents, no single stock will have more than 35 percent weight in the scheme's index, weightage of the top three constituents of the scheme's index cumulatively will not be more than 65 percent of the index.
The maximum total expense ratio permissible under regulation 52(6) (b) is upto 1 percent of daily net assets.
Investment strategy
The scheme will be managed passively with investments in stocks in a proportion to the weightage of these stocks in the Nifty Financial Services TRI. The investment strategy would revolve around reducing the tracking error by rebalancing the portfolio regularly, taking into account the change in weights of stocks in the index as well as the incremental collections or redemptions in the scheme.
Since it is an exchange traded fund, it will only invest in the securities that comprise the underlying index.
However, due to corporate action in companies comprising of the index, the scheme may be allocated/allotted securities which are not part of the index.
Rebalancing of the scheme will be done whenever there is a change in the underlying index or any change due to corporate action with respect to the constituents of the underlying index within 7 calendar days.
The scheme may also invest in debt & money market instruments to meet the requirements of liquidity and expense.