Mirae Asset Nifty IT ETF opens for subscription: Should you invest in this NFO

Mirae Asset Nifty IT ETF, an offering from Mirae Asset Mutual Fund, has opened for subscription on Friday, October 13. The same will be available till October 18.

The new fund offer (NFO) will re-open for continuous sale and repurchase from October 23, 2023. The Mirae Asset Nifty IT ETF is an open-ended scheme that falls under the category of 'Other Scheme - Other ETFs.'

The core goal of the fund is to track the Nifty IT Index by investing in stocks that constitute the index in a similar proportion. Additionally, it may invest in money market instruments, debt securities, and units of debt/liquid schemes of domestic mutual funds.

The benchmark of the scheme is the Nifty IT TRI (Total Return Index).

The NFO strives to produce returns that match the performance of the Nifty IT Total Return Index. It's important to note that, as with any investment, there is no guarantee of achieving this objective, the fund house said.

There are no entry loads applicable to this ETF, and the exit load is also not specified.

To invest in the NFO, individuals need to commit a minimum of Rs 5,000, with subsequent multiples of Re 1 for additional investments.

Following the NFO period, the ETF is set to be listed on the NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) within 5 working days from the date of allotment.

This ETF replicates the performance of the Nifty IT Index, which comprises 10 IT companies listed on the National Stock Exchange. Investing in this ETF provides an opportunity to tap into the performance of Indian IT companies, the fund house said.

The fund claims to offer a relatively low-cost option. The Total Expense Ratio (TER) of Nifty IT ETFs is 21 basis points, whereas the average TER of active large-cap funds (regular plan) is considerably higher at 193 basis points.

Ekta Gala and Vishal Singh are fund managers of Mirae Asset Nifty IT ETF.

The Mirae Asset Nifty IT ETF is recommended for investors with an investment horizon of 3+ years, making it suitable for wealth creation, as per the fund house.

The decision to invest in the Mirae Asset Nifty IT ETF should align with one's financial goals, risk tolerance, and investment horizon. Here are a few key considerations:

Diversification: Investing in sector-specific ETFs like the Nifty IT ETF can be a valuable addition to a diversified portfolio.

Long-term growth potential: Given the size and significance of the IT sector in India, there's potential for long-term growth, making it a decent proposition for investors with a longer investment horizon, the fund house said.

However, as with any investment, there are risks involved, including market fluctuations and tracking errors. It's advisable to consult with a financial advisor to determine if the Mirae Asset Nifty IT ETF aligns with the investment objectives and risk tolerance.