Bandhan Mutual Fund (formerly IDFC Mutual Fund) announced the launch of the Bandhan Financial Services Fund, an open-ended equity scheme, offering investors the opportunity to benefit from the multi-year growth opportunities in the financial services sector.
The scheme opened for public subscription on July 10, 2023, and will close on July 24, 2023. The scheme re-opens for ongoing subscription and redemption within five business days from the date of allotment of units.
Q. What kind of mutual fund scheme is this?
This is an open-ended equity scheme investing in the financial services sector.
Q. What is the main objective of investing in this fund?
The scheme seeks to generate long-term capital appreciation by investing predominantly in equity and equity-related instruments of companies engaged in financial services. There is no assurance or guarantee that the objectives of the scheme will be realized.
Vishal Kapoor, CEO, Bandhan AMC said, “A significant portion of India’s economic growth is fuelled by the financial services sector. Powerful enablers like increasing financial inclusion, growing digitization, and the relatively stronger balance sheet of banks and NBFCs provide visibility for strong earnings growth for this sector. It has been a key driver of returns for the capital market with the Financial Services Index growing 18X since inception compared to 10X for the Nifty 500 Index. The BandhanFinancial Services Fund will go beyond the traditional Banking sector by diversifying further with investments in Capital Markets, NBFCs, Insurance, and Fintech as well, providing investors with an opportunity to benefit from India’s long-term growth story.”
Q. How may one invest in this scheme?
Investors can invest under the scheme with a minimum investment of ₹1000 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:
| Instruments | Indicative allocations (% of total assets) | Risk Profile | |
Minimum | Maximum | ||
Equity and equity-related instruments of companies engaged in the financial services sector | 80% | 100% | Very High |
Equities & equity-related securities other than above and overseas securities | 0% | 20% | Very High |
Debt Securities and Money Market Instruments (including Government securities, Securitised debt) | 0% | 20% | Low to Moderate |
Units issued by REITs & InvITs | 0% | 10% | Very High |
Q. Are there similar mutual funds in the market?
To date, many asset management companies (AMCs) have launched such banking and financial services funds, thus, allowing inclined investors to avail of returns corresponding to the total returns of the securities in this particular index. These include:
Mutual Fund House | Name of the Fund |
TATA Mutual Fund | Tata Banking and Financial Services Fund |
SBI Mutual Fund | SBI Banking & Financial Services Fund |
Baroda BNP Paribas Mutual Fund | Baroda BNP Paribas Banking and Financial Services Fund |
Taurus Mutual Fund | Taurus Banking and Financial Services Fund |
ITI Mutual Fund | ITI Banking and Financial Services Fund |
Aditya Birla Sun Life Mutual Fund | Aditya Birla Sun Life Banking and Financial Services Fund |
Nippon India Mutual Fund | Nippon India Banking & Financial Services Fund |
Mirae Asset Mutual Fund | Mirae Asset Banking and Financial Services Fund |
ICICI Prudential Mutual Fund | ICICI Prudential Banking and Financial Services Fund |
HDFC Mutual Fund | HDFC Banking and Financial Services Fund |
IDBI Mutual Fund | IDBI Banking & Financial Services Fund |
Kotak Mahindra Mutual Fund | Kotak Banking & Financial Services Fund |
LIC Mutual Fund | LIC MF Banking & Financial Services Fund |
| Source: MoneyControl | |
Q. How will the scheme benchmark its performance?
The Nifty Financial Services TRI index will be the benchmark for Bandhan Financial Services Fund.
The Nifty Financial Services Index is designed to reflect the behaviour and performance of the Indian financial market which includes banks, financial institutions, housing finance, insurance companies, and other financial services companies. The Nifty Finance Index comprises 20 stocks that are listed on the National Stock Exchange (NSE).
Benchmark has been chosen based on the investment pattern/objective of the scheme/s and the composition of the index. The Trustees may change the benchmark in the future if a benchmark better suited to the investment objective of the scheme is available, provided any change in benchmark will be subject to regulatory approval of SEBI.
Q. 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 charged as under:
- If redeemed/switched out within one year from the date of allotment - 1% of applicable NAV;
- If redeemed/switched out after one year from the date of allotment – Nil
Q. Who will manage this scheme?
Sumit Agrawal and Manish Gunwani will be looking into the equity investments of this scheme whileHarshal Joshi would be evaluating the debt investments in this scheme. Nishita Shah would be taking care of the overseas investment portion.
Q. 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.
