DSP Mutual Fund has announced the launch of DSP Nifty Bank ETF, an open-ended scheme tracking the Nifty Bank index. The new fund offer (NFO) will remain open for subscription from December 26 to December 28, 2022.
This ETF offers investors an option to take sectoral exposure to the banking sector. It would be invested in equity and equity-related securities covered by Nifty Bank index, subject to tracking error. This is especially relevant now as banking stocks are available at attractive valuations despite the recent rally in the stock market.
The scheme has been labelled as “Very Risky” and is best suited to investors seeking long-term capital growth. Considering the high level of risk involved, investors must consult their financial advisors if in doubt about whether the scheme is suitable for them.
Anil Ghelani, CFA, Head – Passive Investments & Products, DSP Investment Managers, said, “A banking system functions as the heart and lifeblood of any functioning economy. A robust banking system is key to economic growth and development, especially for a fast-growing country like India. The banking sector is expected to see further value unlocking due to the fundamental factors and that coupled with attractive valuations presents an attractive opportunity for investors. We would advise investors to consider this product with a long-term orientation as evidenced by the long-term performance of the Nifty Bank Index.”
Banking stocks currently contribute the highest share of profits among all sectors in the major indices. The top five banks are also seeing strong credit growth and an improvement in asset quality. Banks have also benefited from an expansion in net interest margins after Covid. Robust credit growth and improvement in operating margins and return on equity for banks are other positives that indicate a healthy outlook for banking as a theme.