The DSP Mutual Fund recently introduced the DSP Nifty Private Bank Index Fund, an open-ended scheme that tracks the Nifty Private Bank Index. This fund offers investors a targeted approach to the private banking sector in India. The NFO will be available from February 14, 2025, to February 28, 2025. Investors have the option to apply via lump-sum investments or through systematic investment plans (SIPs).
The DSP Nifty Private Bank Index Fund will primarily invest in India's top four private sector banks, comprising around 80% of the index. Investors have the option to choose between lump-sum investments or systematic investment plans (SIPs).
According to a press statement by the fund house, the fund aims to provide investors with a concentrated investment opportunity in India's private banking sector, which has shown steady growth and profitability over time.
Private banks in India have seen their market share double over the past 20 years. Despite a recent underperformance in the Nifty Private Bank Index, current valuations are below the 10-year average, positioning the sector for a potential turnaround, according to the fund house.
Anil Ghelani, CFA, Head of Passive Investments & Products at DSP Mutual Fund, said: “The concentration of larger banks within the Nifty Private Bank Index can be an advantage. Leading banks globally demonstrate sustainable growth due to customer trust, access to capital, and economies of scale. This fund provides a streamlined approach to India’s private banking sector.”
Diipesh Shah, Fund Manager at DSP Mutual Fund, said: “The DSP Nifty Private Bank Index Fund presents a tax-efficient way to access the sector. Unlike direct stock investments, mutual funds do not incur capital gains tax on rebalancing or dividends. Given that many index constituents trade below historical averages, this offers an attractive entry point.”
Bandhan Nifty Next 50 Index Fund
Bandhan Mutual Fund has recently introduced the Bandhan Nifty Next 50 Index Fund, an open-ended scheme that mirrors the Nifty Next 50 Index. This index comprises 50 companies that rank just below the Nifty 50, offering a mix of large-cap exposure with growth potential similar to mid and small-cap companies. The New Fund Offer (NFO) opened on February 12 and will conclude on February 25, 2025.
Employing a Free Float Market Capitalisation-based weighting methodology, the Nifty Next 50 Index is rebalanced twice a year, in March and September. The Bandhan Nifty Next 50 Index Fund caters to investors seeking a large-cap-focused strategy that comes with increased risk and the potential for higher returns.
The goal of the investment is to mirror the Nifty Next 50 Index by purchasing securities in the same proportion as the index, aiming to generate returns that closely match the total return of the Nifty Next 50 Index, taking into account any possible tracking errors.
The minimum initial investment amount for lump sum and additional purchases is Rs 1,000, with increments of Re 1 thereafter. For SIP investments, the minimum amount is Rs 100, with increments of Re 1 thereafter, and a minimum commitment of six instalments.
Vishal Kapoor, CEO of Bandhan AMC, highlighted the appeal of the Nifty Next 50 Index. “This index provides access to well-established companies in their high-growth phase across diverse sectors like consumer discretionary, FMCG, and IT. Over the past nine years, 24 companies from this index have moved into the Nifty 50, demonstrating its role as a launchpad for future market leaders. Historically, it has outperformed the Nifty 50 across market cycles. The recent 20% correction in the index, pushing it below its five-year average, suggests a potential recovery phase. This fund allows investors to participate in this segment’s long-term growth at an opportune time.”