Navi Mutual Fund has announced the launch of Navi Nifty Bank Index Fund, an open-ended equity scheme that will replicate the Nifty Bank Index. This index fund offers investors a cost-effective way to invest in the most liquid and large banking stocks of the country. With an expense ratio of 0.12% for the direct plan, the Navi Nifty Bank Index fund reaffirms Navi Mutual Fund's low cost approach to passive funds already demonstrated in Navi Nifty 50 and Navi Nifty Next 50 index funds. The NFO opened on January 17th and will close for subscriptions on January 31st.
Nifty Bank Index offers exposure to 12 stocks from the banking sector including 10 private and 2 PSU banks which capture 88% of the market capitalization of all the listed banks. The Nifty Bank Index has achieved attractive returns over the long term. Its 1 year, 5 year and 10 year CAGR are 14%, 12.5% and 16.9% respectively. While the Nifty Bank Index underperformed in the broader market since the start of the Covid outbreak in early 2020, with healthy balance sheets of banks and corporates, the sector is well positioned to capture cyclical uptick in growth. The Nifty Bank TRI has also outperformed the Nifty 50 TRI in 6 out of the last 10 years till FY21. As of December 31, 2021 the top 5 constituents of the Nifty Bank Index are HDFC Bank Ltd (27.8%), ICICI Bank Ltd (22.62%), Kotak Mahindra Bank Ltd (11.61%), Axis Bank Ltd (11.52%) & State Bank of India (11.45%).
According to a company spokesperson, "India's aim to become a US$ 5 trillion economy will be driven by significant expansion and growth in our banking sector over the next few years. This sector is clearly poised for growth and Navi's Nifty Bank Index Fund provides an opportunity for investors to participate in this growth journey." |
