HDFC Nifty PSU Bank ETF, an offering from HDFC Mutual Fund, has opened for subscription on Friday, January 12. The window will remain open until January 23. This new fund offer (NFO) is an open-ended scheme that aims to replicate and track the NIFTY PSU Bank Index (TRI).
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The investment objective is to generate long-term returns commensurate with the performance of the underlying index, subject to tracking error, the mutual fund house said.
However, there is no guaranteed assurance of realising the investment objective, it added.
Liquidity
Units will be listed on the National Stock Exchange of India Ltd. (NSE) and/or BSE Limited (BSE). Continuous subscription (buy)/redemption (sell) will be available during trading hours.
Market makers appointed by the asset management company (AMC) will provide continuous liquidity.
Redemption
Investors can redeem units directly with the mutual fund during a liquidity window, provided certain conditions are met.
The AMC closely monitors scenarios such as a continuous discount in trading price, unavailability of quotes, or insufficient bid size, HDFC Mutual Fund said.
Dematerialisation
Units are available only in dematerialised (electronic) form, requiring investors to have a beneficiary account with a Depository Participant (DP) of NSDL/CDSL.
Load structure
Entry and exit loads are not available with this NFO.
Minimum subscription amount
During the NFO period, individuals can invest a minimum of ₹500 per application and in multiples of ₹1 thereafter.
On an ongoing basis, no minimum application amount on the stock exchange is applicable, but market makers and large investors may have specific requirements.
Risk factors
The scheme entails standard risk factors associated with mutual funds, as well as scheme-specific risks. These include risks associated with passive investments, tracking errors, and tracking differences.
Asset allocation
Under normal circumstances, the scheme will allocate a minimum of 95% of net assets to securities covered by the NIFTY PSU Bank Index (TRI) and up to 5% to debt securities and money market instruments.
Fees and expenses
NFO expenses will be borne by AMC, while annual scheme recurring expenses include investment management and advisory fees, trustee fees, audit fees, marketing expenses, etc., estimated to be within 1.00% of daily net assets.
A look at returns of similar funds
| Fund Name | 6-month return (%) |
|---|---|
| ICICI Prudential Nifty PSU Bank ETF | 28.83 |
| Nippon India ETF Nifty Bank BeES | 6.20 |
| Kotak Nifty Bank ETF | 6.17 |
| SBI Nifty Bank ETF | 6.19 |
| ICICI Prudential Nifty Bank ETF | 6.20 |
(Source: Value Research)
Investment considerations
Considering the scheme's alignment with the NIFTY PSU Bank Index, investors seeking exposure to the PSU banking sector may find HDFC NIFTY PSU BANK ETF a decent option.
However, as with any investment, it is crucial to carefully assess the associated risks and consider one's financial goals and risk tolerance before making investment decisions, experts say.
(Edited by : Amrita)
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