Axis Mutual Fund launches Nifty IT Index Fund — NFO to be available from June 27 to July 11

Technology is a focal point for all businesses, across sectors. All organisations, big or small, are reshaping and accelerating their businesses through new age technology like cloud computing, machine learning, augmented reality, artificial intelligence etc. Consequently, this sector usually sees better than expected demand. Indian technology companies have been consistently increasing their market share vis a vis global peer. India’s IT and BPM exports have outperformed global IT services growth. With exports of over US$ 194 billion annually, the IT space is the largest single service exporter industry in India, the fund house said.

As per NASSCOM, the industry is estimated to grow to $245 billion, reflecting an incremental net revenue addition of $19 billion for the year. The growth has been seen in IT services, BPM, software products, ER&D, and the domestic market.

The external headwinds faced in 2022 resulted in valuations of IT companies becoming far more reasonable. Companies are now trading at discount to last 3/5 years’ average multiples. These attractive valuations and a better-than-expected earnings season in Q1FY24 could lead to recovery in revenue momentum from second half of FY24.

While Axis Mutual Fund had introduced the Axis Nifty IT ETF in 2021, the launch of the Axis NIFTY IT Index Fund will enable an investment opportunity for an even wider audience.

The investment objective of the Axis Nifty IT Index Fund is to provide returns before expenses that correspond to the total returns of the NIFTY IT TRI, subject to tracking errors. However, there is no assurance that the investment objective of the scheme will be achieved. The scheme endeavours to invest in stocks forming part of the underlying index in the same ratio as per the index to the extent possible. Essentially, 95 percent to 100 percent of the investments will be made in securities covered by Nifty IT TRI and the remaining in debt and money market investments, Axis Mutual Fund said.

To that extent follows a passive investment strategy, except to the extent of meeting liquidity and expense requirements.

B Gopkumar, MD & CEO, Axis AMC said, “India has been a leader in driving change through technology across sectors. This has been more visible in the last three years, post Covid where we showed our resilience and resurgence. We are in the cusp of rewriting our growth story led by technological innovations. Increasingly all companies will be operating in this digital arena. With the launch of the Axis Nifty IT Index Fund, we are expanding our bouquet of products, more importantly, offering our investors an opportunity to be part of India’s tech enabled story.”

Given the mutual fund structure, investors can look to invest through various systematic options like SIPs, STPs and lumpsum investments.