Passive investing has been gaining ground in India primarily due to wider participation of retirement trusts and increasing investor awareness. Passive funds are designed to track the performance of an index. They achieve this by replicating the portfolio of the underlying index.
Axis Mutual Fund, one of the fastest growing fund house in India, today announced the launch of their new fund offer – ‘Axis Banking ETF’. It is an Exchange Traded Fund that offers investors an opportunity to invest in the biggest banks in India at their own pace as it gives exposure to them all in a neatly packed bite-sized exchange traded fund. The fund is designed in a manner that it tracks the performance of the 12 largest banks listed on the NSE. Only banking stocks that are allowed to trade in F&O segment are eligible to be constituent of the Index. Currently, the index has 83.3% exposure to private banks and ~11.7% exposure to PSU banks*.
Why Banking Sector?
Banking is the life blood of the financial sector. Its importance in our economy has been growing consistently as we see the long term shift to financialization of household assets and greater demand for financial products.
The weight of Banking in the Indian markets has been going up steadily over the last decade and it is now the largest sector in the key equity market benchmarks such as Nifty 50. Even in recent quarters, banking sector has shown resilience despite the pandemic. Given the scale and the added thrust that the government and regulatory bodies are providing to the banks, the sector is poised for a revolution. Banks are increasingly funding to retail masses and offering services backed by technology that are increasing their potential to scale business.
Apart from being cost effective, ETFs let investors invest at real-time prices as opposed to end of day price by sector funds. It protects their investments from the inflows and outflows of short-term investors. Furthermore, ETFs are best suited to earn asset-class linked performance and is touted to be one of the most flexible tools for gaining instant exposure to the markets, thereby equitizing cash.
Mr. Chandresh Kumar Nigam, MD & CEO, Axis AMC said, “As a responsible fund house, Axis MF understands the need to offer a complete bouquet of offerings to investors. We want to develop, introduce and provide the products that are relevant in the current context. Accordingly, we recognize the need to offer investors a choice of strategies including robust passive products. The launch of Axis Banking ETF is a part of that endeavour and we expect to take a number of initiatives to build up our passive product suite over time.”
The new fund offers (NFO) opens for subscription from October 16, 2020 to October 29, 2020.