SBI Mutual Fund AMC has filed papers with SEBI for approval of the SBI-ETF Quality, an open-ended exchange traded fund (ETF) that tracks the NIFTY 200 Quality 30 Index. The ETF will focus on ‘quality stocks’ as shortlisted by the index. After launch, it will be available for trading on the exchanges.
This scheme is expected to provide returns that closely match the returns of the NIFTY 200 Quality 30 Index. As a result, between 95% and 100% of this ETF’s assets would be invested in securities features on the chosen index. Additionally, up to 5% of the scheme’s assets would be invested in liquid fund units and money market instruments. This ETF also maintains the flexibility to invest in derivative instruments whose notional exposure would be limited to 5% of total assets. The SBI ETF Quality scheme will however not invest in foreign securities, American Depository Receipts, Global Depository Receipts or securitized debt.
The NIFTY 200 Quality 30 Index is the chosen benchmark for the new ETF. This unique NIFTY Index features the top 30 companies featured on the NIFTY 200 based on their “quality score”. As per the index methodology the quality score of each security is calculated using the EPS (earnings per share), financial leverage (Debt/Equity Ratio) and return on equity (ROE) data collected over the past 5 years. This index features high 1 year and 5 year returns of 25.82% and 16.66% along with P/E of 29.23 as on 30th April 2018. A majority of the weight of this index is assigned to the consumer goods (33.33%), IT (23.76%) and automotive (18.53%) sectors. Individual securities assigned the maximum weight on the NIFTY 200 Quality 30 Index include Tata Consultancy Services, Infosys, HCL Technologies, Hindustan Unilever, Hero MotoCorp and ITC .
The SBI ETF Quality will be managed by Raviprakash Sharma, who also manages other leading ETF schemes of SBI MF AMC such as SBI-ETF Nifty 50, SBI-ETF Nifty Bank, SBI-ETF BSE 100 and SBI-ETF BSE Sensex. Among these, the SBI-ETF BSE Sensex is one of the top-performing passively managed funds in the country with 1 year, 3 year and 5 year returns of 20.62%, 12.19% and 16.86%.
Date: 20 AUG 2018