Tata Mutual Fund Files Papers with SEBI for Nifty ETF

The rise of ETFs has got another leg up, with Tata AMC filing papers for the Tata Nifty Exchange Traded Fund. The fund will track the performance of the Nifty 50 index. The scheme will be launched as an open-ended ETF which means you will be able to buy/sell units after the ETF is launched (after the NFO period). You can do this on a stock exchange but you will need a demat and trading account.

Tata Nifty Exchange Traded Fund will be benchmarked against the Nifty 50 TRI (Total Returns Index). As of 31st July 2018, the Nifty 50 Index has shown returns of 12.70% and 14.61% for the 1 year and 5 year periods. It has a P/E of 28.22. Sectors such as financial services (37%), energy (15%), Information Technology (13%), consumer goods (11%) and automobile (8%) are the major sectors featured in this index.

As this new ETF from Tata tracks the Nifty 50, it will feature large cap oriented, sector agnostic equity investments that account for 95% to 100% of its assets. Key individual equity and equity-derivative investments of this ETF are expected to include HDFC Bank, Reliance Industries Ltd., HDFC, Infosys and ITC as they have the largest individual weights on the Nifty 50 index. The remainder of this scheme’s assets of up to 5% may be invested in various money market funds including units of the Tata Liquid Fund.

Tata Nifty Exchange Traded Fund will be managed by Danesh Mistry who currently manages other top funds of Tata Mutual Fund AMC including Tata Equity Savings Fund, Tata Digital India Fund, Tata India Pharma & Healthcare Fund and Tata Resources & Energy Fund. Among these, the Tata Digital Fund is a relatively new launch in the sectoral/thematic segment and has posted 1 year returns of over 62%. However the Nifty ETF will simply track the Nifty 50, giving the fund manager a limited role in the ETF’s performance.

Other Funds by Tata Asset Management

{Data as on Feb 20, 2020; Source: Value Research}