scorecardresearchWhich are the funds offering ETFs in key sectors

Which are the funds offering ETFs in key sectors

Updated: 17 Mar 2022, 02:13 PM IST

Healthcare, banking, information technology, utilities, and energy are some of the important industries to look for when investing in ETFs. We give you the lowdown on the ETF options in these sectors.

An ETF is a basket of securities that are traded on the stock exchanges.

An ETF is a basket of securities that are traded on the stock exchanges.

An ETF, or exchange traded fund, is a type of stock that may also be referred to as a basket of assets that are tradeable in small units in the stock exchange. ETFs, just like other funds, pool in the resources of hundreds of individuals and use them to buy a variety of marketable economic investments such as shares, bonds, and derivatives.

There are some clear benefits to investing in sectors through ETFs rather than actively managed mutual funds. For starters, there is no exit load, therefore ETFs may be used to take short-term sector holdings. Exit loads are common in active funds with short holding periods. Second, you don't risk the fund manager making bad choices because the investments are made in different sectors in proportion to their index values.

Finally, ETFs charge lower management fees than actively managed funds, slashing investment expenses.

Let's look at some of the key ETF sectors and the asset management companies that offer them.

Healthcare Sector

Healthcare funds are a type of equity fund that invests primarily in equity-linked instruments issued by pharmaceutical and healthcare firms. Investing in these funds allows you to gain exposure to a range of prominent pharmaceutical company stocks. Since the outbreak of the COVID-19 epidemic, healthcare finances have been ringing.

Investors have invested heavily into this industry because these firms are important in the development of a vaccine to treat COVID-19. In the foreseeable future, the industry is likely to perform well.

Some of the most well-known healthcare exchange-traded funds are:

  • ICICI Prudential Pharma Healthcare and Diagnostics Fund Growth
  • NIPPON INDIA PHARMA FUND - Direct Plan - Growth
  • Tata India Pharma & Healthcare Fund Regular Growth
  • Nippon India Pharma Fund
  • Aditya Birla Sun Life Nifty healthcare ETF

Finance Sector

India's economy is the world's fifth biggest, and economists predict it will grow at the quickest rate of any major country in the next decade. Banking and finance businesses in India are expected to play a significant role in this potential expansion. The companies in the finance sector offer loans and insurance to entrepreneurs and the expanding middle class, and have a huge scope of growth.

Some of the funds that invest in finance sector include include the following:

  • Aditya Birla Sun Life Banking & Financial Services Regular Growth
  • ICICI Prudential Banking and Financial Services Fund Growth
  • HDFC Banking & PSU Debt Fund Regular Plan Growth Option
  • SBI Banking & Financial Services Regular Growth
  • Kotak Banking and PSU Debt Growth

IT Sector

Due to the pandemic, the IT industry has grown in prominence in recent years, particularly with the introduction of digital and cloud technology. This tendency is anticipated to remain in the coming years, according to industry analysts. One of the benefits of investing in these mutual funds, according to experts, is that you may obtain access to and visibility to a wide range of technology firms with only a single fund.

Some of the most well-known IT exchange-traded funds are:

  • Nippon India ETF Nifty IT
  • ICICI Prudential Technology Fund
  • Tata Digital India Fund - Regular Plan
  • Aditya Birla Sun Life Digital India Fund

Energy Sector

Energy ETFs are a type of hybrid equities that may hold a complete sector index, as well as domestic and foreign energy companies. Energy exchange-traded funds (ETFs) are popular among small and large investors alike. In addition, the energy industry is a critical component of every economy. ETFs in the energy industry are distributed among a variety of firms, reducing the risk involved in investing. They are a good way for investors to get exposure to equities of energy firms.

These are some of the energy exchange-traded funds:

  • Nippon India Power & Infra Fund (IDCW)
  • DSP Natural Res & New Energy Fund-Reg (IDCW)
  • Tata Resources & Energy Fund-Reg (G)
  • Nippon India Power & Infra Fund (G)

Utility Sector

A utility exchange-traded fund (ETF) invests in tangible assets including agricultural goods, valuable metals, and environmental assets. A utility ETF usually focuses on investments in futures contracts or a specific commodity tied to physical storage. 

Other ETFs use a mixture of derivatives contracts and physical storage to monitor the overall performance of an index that includes numerous particular commodities. They are widespread because they provide investors with access to commodities without requiring them to learn how to trade futures or other derivatives.

These are some of the utility exchange-traded funds:

  • Aditya Birla Sun Life Commodity Equities Fund - Global Agri Plan
  • Principal Global Opportunities Fund-IDCW
  • ICICI Prudential US Bluechip Equity Fund-IDCW
  • Birla Sun Life Gold ETF
  • Goldman Sachs Gold ETF

For both active and passive investors, ETFs have become popular investment instruments. ETFs offer low-cost access to a wide range of asset classes, industrial sectors, and overseas markets, but they also come with their own set of dangers.

Companies that are listed on a stock exchange are exposed to market price changes. They aren't as secure as government bonds. The stock market circumstances have a big impact on whether you make money or lose money. As a result, for a well-informed investor, sector ETFs may be a wonderful investment.


Note: This story is for education purposes only and is not an investment advice.

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First Published: 16 Mar 2022, 09:26 AM IST