NFO review: Mirae Asset Nifty Financial Services ETF launches
The new fund offer of this open-ended scheme replicating/tracking Nifty Financial Services Total Return Index closes on July 29
Mirae Asset MF has launched a new passive investing product i.e. Mirae Asset Nifty Financial Services ETF. This is an open-ended exchange traded fund that will copy the movement of Nifty Financial Services Total Return Index, which has over the long term performed better than the broader market. Let us find out more.
BFSI industry is a direct play on India’s growing GDP. The Financial Services sector may be one of the key growth engine as India seeks to double its GDP (Gross Domestic Product) to US$5 trillion.
The Financial Services sector is a fairly diversified one. It is undergoing rapid expansion due to digitalization and emergence of new products and services.
Given that key segments of the Financial Services sector right now have low market penetration, this provides an opportunity for growth.
Why Nifty Financial Services Index
The index has outperformed with strong correlation. Unlike just the Nifty Bank index, which is more of a one-trick pony (banks), Nifty Financial Services is a more comprehensive offering and is suited for passive investments. There are 20 stocks in this basket. No single stock shall be more than 33 per cent weight and weight of top 3 stocks cumulatively shall not be more than 62 per cent of the total at the time of rebalancing.
Financial Services encompasses not only banks but other industries such as NBFC, Insurance, Capital Market etc. The index captures the same colour.
Also note that the Nifty Financial Services index has exhibited better return to risk profile along with lower drawdown vis-à-vis Nifty Bank Index.
Thus, Mirae Asset Nifty Financial Services ETF is a relatively low-cost option to participate in Banking & Financial Services sector. The index is re-balanced on semi-annual basis.
Benchmark: Nifty Financial Services (TRI)
Authorised Participant: Mirae Asset Capital Markets (India) Pvt Ltd.
Listing: NSE and BSE
Fund manager: Ekta Gala
NFO closes: July 29, 2021
Mirae Asset Nifty Financial Services ETF will be ideal for wealth generation with minimum tenure of 5 years and is suited to aggressive risk profile investors.