Tata Mutual Fund has expanded its passive fund offerings with the launch of six index funds in one go on April 8.
The new index funds are Tata Nifty Auto Index Fund, Tata Nifty Realty Index Fund, Tata Nifty Financial Services Index Fund, Tata Nifty MidSmall Healthcare Index Fund, Tata Nifty500 Multicap India Manufacturing 50:30:20 Index Fund and Tata Nifty500 Multicap Infrastructure 50:30:20 Index Fund.
The new fund offers (NFO) for these schemes will be open from April 8 to April 22. The minimum investment during the NFO period is Rs 5,000.
Among the six schemes, three are industry firsts: Tata Nifty MidSmall Healthcare Index Fund, Tata Nifty500 Multicap India Manufacturing 50:30:20 Index Fund and Tata Nifty500 Multicap Infrastructure 50:30:20 Index Fund. The fund house has co-created the benchmarks with Nifty Indices, an index provider and subsidiary of the National Stock Exchange of India.
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“These funds offer long-term opportunities. Real Estate, for example, is coming after a decade’s hiatus on the back of strong end user-led demand, which makes it sustainable. Like they say, first it crawls and then it leaps, the auto sector is shifting gears with a technology change (electric vehicles). The healthcare index fund is based on small-cap and mid-cap companies. This segment offers a variety of opportunities across hospitals, pharma and diagnostics catering to both preventive and corrective healthcare," said Anand Varadarajan, head of institutional clients, banking, alternate investments and product strategy at Tata Asset Management.
"In infrastructure, we are witnessing strong growth in railways, roadways, electrification and so on. In manufacturing, the whole China+1 and PLI (Production Linked Incentive) scheme is paving the way for heightened manufacturing activity.”
Varadarajan said as an investor, one has to constantly keep looking at where money is going be rather than where the money has been.
Here's what the three new unique schemes offer.
Tata Nifty MidSmall Healthcare Index Fund
This fund tracks the performance of mid-cap and small-cap stocks in the healthcare sector. The index includes up to 30 stocks selected from the parent Nifty MidSmallcap 400 index.
In terms of weightage, the top constituents are Max Healthcare Institute (14.26 percent), Lupin (9.19 percent), Aurobindo Pharma (7.21 percent), Alkem Laboratories (5.84 percent) and Fortis Healthcare (5.15 percent).
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In terms of performance, the Nifty MidSmall Healthcare Total Return Index (TRI) gained 66.63 percent on a one-year basis.
Tata Nifty500 Multicap India Manufacturing 50:30:20 Index Fund
The index fund aims to track the performance of select large-cap, mid-cap and small-cap stocks from the Nifty 500 index that represent the manufacturing theme.
The overall weight for the large-cap segment is fixed at 50 percent, mid-cap segment at 30 percent and small-cap segment at 20 percent.
As of March end, there were 75 stocks in the index: 15 from the large-cap universe, 25 from mid-cap and 35 from the small-cap universe.
The top five companies in terms of weightage are Reliance Industries (9.96 percent), Sun Pharmaceutical Industries (4.88 percent), Tata Motors (4.88 percent), Mahindra & Mahindra (4.80 percent) and Maruti Suzuki India (4.64 percent).
In terms of sectoral representation, automobile and auto components has the highest weightage at 27.55 percent, followed by healthcare 21.80 percent and capital goods 13.11 percent.
The Nifty500 Multicap India Manufacturing 50:30:20 TRI has risen 53.78 percent on a one-year basis.
Tata Nifty500 Multicap Infrastructure 50:30:20 Index Fund
The fund will track select large-cap, mid-cap and small-cap stocks from the Nifty 500 that represent the infrastructure theme.
The overall weight of each market capitalisation is fixed and there are 75 stocks in total in the index.
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The top five stocks in the index are Larsen & Toubro (10.35 percent), Reliance Industries (10.07 percent), Bharti Airtel (7.27 percent), NTPC (3.71 percent) and Max Healthcare Institute (2.97 percent).
The top three sectors are oil, gas & consumable fuels (21.26 percent), construction (12.84 percent) and telecommunication (11.08 percent).
The Nifty500 Multicap Infrastructure 50:30:20 TRI has gained 61.62 percent in the past one year.
“After Covid-19, certain sectors look much more structural and promising. There is more push on manufacturing and infrastructure from the government side. Realty sector is also getting back on track. Further, valuations-wise, banking and financial services still look attractive," said Ravi Kumar TV, founder of Gaining Ground Investment Services. "If an investor’s portfolio is overweight on certain diversified funds, they can include some of the sectoral or thematic funds either through the active or the passive route. However, timing the entry and exit matters a lot when selecting a sectoral or a thematic fund.”
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