DSP Nifty Healthcare ETF, an offering from DSP Mutual Fund, has opened for subscription on Thursday, January 11. This is an open-ended scheme designed to replicate and track the Nifty Healthcare Index. The new fund offer (NFO) will be available till January 25, 2024.
The scheme aims to provide returns corresponding to the total return of the underlying index, Nifty Healthcare TRI, subject to tracking errors. Investors should note that there is no guarantee that the investment objective of the scheme will be achieved, DSP Mutual Fund said.
Minimum subscription amount
Investors looking to participate in the DSP Nifty Healthcare ETF can start with a minimum subscription amount of ₹5,000 during the
New Fund Offer (NFO) period.
Load structure
There is no entry load, aligning with the guidelines set by the Securities and Exchange Board of India (Sebi) master circular. This means that investors are not subjected to any additional charges when entering the scheme.
For redemptions made by market makers or large investors directly with the fund in creation unit size, no exit load will be levied.
For redemptions of units other than creation unit size, there is no exit load as well, allowing investors to sell their units on the stock exchange without incurring additional charges.
Liquidity and listing
The units of the scheme are proposed to be listed on stock exchanges (BSE and NSE) to ensure liquidity through the secondary market. Investors can buy and sell units on all trading days, with the price in the secondary market determined by demand and supply.
Subscription and redemption
Investors can subscribe to or redeem units directly with the mutual fund in creation unit size. Market makers and large investors can transact in creation unit size on any business day.
However, as of May 1, 2023, large investors can do so provided the transaction value exceeds ₹25 crore.
Asset allocation
Under normal circumstances, the scheme anticipates allocating its assets with 95-100% in equity and equity-related securities of companies constituting the Nifty Healthcare Index.
Cash and cash equivalents are expected to constitute 0-5% of the total assets.
| Instruments | Indicative Allocations (% of Total Assets) | Risk Profile |
|---|
| Equity and Equity Related Securities of companiesconstituting the Nifty Healthcare Index, the UnderlyingIndex | 95% - 100% | Very High |
| Cash and Cash Equivalents | 0% - 5% | Low to Medium |
(Source: Fund document)
Fees and expenses
The expenses related to the NFO activities, such as sales and distribution fees, marketing, advertising, registrar expenses, etc., will be borne by the AMC.
The annual scheme recurring expenses include investment management and advisory fees, registrar’s fees, marketing and selling costs, etc.
A look at returns of similar funds
| Scheme Name | 1-year return |
|---|
| Aditya Birla Sun Life Nifty Healthcare ETF | 36.30% |
| Nippon India Nifty Pharma ETF | 37.16% |
| Nippon India Pharma Fund | 43.02% |
| ICICI Prudential Pharma Healthcare and Diagnostics Fund | 45.39% |
| SBI Healthcare Opportunities Fund | 42.69% |
(Source: Value Research)
Investment considerations
Investors looking to explore opportunities in the healthcare sector may find the DSP Nifty Healthcare ETF an attractive avenue. However, experts advise a cautious approach, emphasising the importance of a thorough evaluation of individual risk tolerance and financial objectives before committing to any investment.
Given that this is a
New Fund Offer (NFO) with a focused investment mandate, experts suggest that investors should exercise prudence and consider diversification strategies.
While some caution against narrowly defined funds, they acknowledge that for those willing to invest, adopting a systematic investment plan (SIP) approach may mitigate risks associated with market volatility and enhance the potential for long-term returns.
