ICICI Prudential Mutual Fund has filed draft offer documents with the Securities and Exchange Board of India (SEBI) for one of India’s first ETFs to invest exclusively in private banks. The new scheme is called ICICI Prudential Private Banks ETF, which will be an open ended exchange traded fund that will track the performance of S&P BSE Private Banks Index. This passive fund will replicate the movement of the underlying index, subject to tracking errors.
Similar sectoral-themed ETFs are operated by fund houses like Kotak and SBI. Kotak Banking ETF, which was launched in December 2014, has given returns of 10.18 percent since its inception. SBI ETF Nifty Bank Fund has given returns of 11.28 percent since its launch in March 2015. (as on Dec. 12, 2018) Both schemes have the Nifty Bank Total Returns Index (TRI) as their underlying benchmark. Unlike these two schemes, the ICICI Prudential Private Banks ETF will solely focus on private banks, skipping the growing non-performing assets of public sector banks.
ICICI Prudential Private Banks ETF scheme will be benchmarked against the recently launched S&P BSE Private Banks Index. The index includes top 12 privately-owned banks (in terms of market cap) that are constituents of the S&P BSE Finance Index. (The benchmark index was launched in August 2018).
The fund will be managed by Kayzad Eghlim, vice president of investments at the fund house. Eghlim also manages other ETF funds like ICICI Prudential Nifty Index Fund, ICICI Prudential Nifty Next 50 Index Fund, ICICI Prudential Sensex Fund, among many others. Managers of passive funds do not play an aggressive part in managing the constituents of the scheme.
Other Funds by ICICI Prudential Asset Management
{Data as on Feb 19, 2020; Source: Value Research}