SBI Mutual Fund to launch consumption exchange-traded fund

SBI Mutual Fund on June 29 announced the launch of SBI ETF (exchange-traded fund) Consumption, an open-ended scheme that would track the Nifty India Consumption Index.

The new scheme would be suitable for investors who are seeking long-term capital appreciation and investment in securities covered by Nifty India Consumption Index. The new fund offer will open on June 30, 2021, and close on July 14, 2021.

The investment objective of the scheme is to provide returns that closely correspond to the total returns of the securities as represented by the underlying index, subject to tracking error.

Vinay M Tonse, MD and CEO, SBI Mutual Fund, said: “We believe passive funds are gaining traction around the world and in India as well where investors would like to invest in line with an index. Investments in ETFs are beneficial for those looking to get exposure to a broad range of asset classes at a lower cost.”

“With the addition of SBI ETF Consumption, we continue to augment our portfolio of offerings in the passive investment space, in addition to our actively managed funds. I believe SBI ETF Consumption is a good opportunity as India’s potential for domestic consumption is very large and continues to be a strong growth story.”

DP Singh, Chief Business Officer, SBI Mutual Fund, said: “Among the passive investment options, ETFs provide many benefits to investors such as diversification, liquidity, low cost, simplicity, and transparency. Consumption has grown consistently over the last few decades and is expected to provide value to investors in the long term as well. We will continue to expand our offerings to help investors achieve their investment goals and provide them access to similar fast-growing themes’’.

Nifty India Consumption Index was launched on January 2, 2006, and comprises 30 companies. It is designed to reflect the behaviour and performance of a diversified portfolio of companies representing the domestic consumption sector which includes sectors like consumer non-durables, healthcare, auto, telecom services, pharmaceuticals, hotels, and media and entertainment.

The Nifty India Consumption Index is rebalanced on a semi-annual basis.

The scheme would invest a minimum of 95 percent and a maximum of 100 percent investment in securities covered by the Nifty India Consumption Index with up to five percent in equity derivatives and up to five percent in money market instruments (including commercial papers, commercial bills, treasury bills, triparty repo, Government securities having an unexpired maturity up to one year, call or notice money, certificate of deposit, usance bills, and any other like instruments as specified by the Reserve Bank of India and units of liquid mutual fund.

The minimum application amount (during the NFO period) required is Rs 5,000 and in multiples of Re 1 thereafter.

The Fund Manager for SBI ETF Consumption is Harsh Sethi, who also manages SBI ETF IT and SBI ETF Private Bank.