Groww Files Draft Paper for Nifty India Defence ETF

Groww has taken a significant step in expanding its investment offerings by filing a draft paper with SEBI for the Groww Nifty India Defence ETF. This scheme is designed to achieve long-term capital growth by investing in securities that constitute the Nifty India Defence Index, aiming to mirror the total return of the index before expenses, subject to tracking errors.

Investment Objective and Strategy

The primary objective of the Groww Nifty India Defence ETF is to replicate the performance of the Nifty India Defence Index. This will be accomplished by investing in the index’s securities in the same proportion and weightage. The fund is managed passively, which means it aims to reflect the index’s performance rather than outperform it.

The investment strategy involves maintaining the portfolio’s composition in line with the Nifty India Defence Index. Regular rebalancing will be carried out to minimize tracking errors, ensuring the portfolio reflects the index as accurately as possible, even with changes in stock weights or variations due to new investments or redemptions.

Scheme Allocation

The scheme will allocate 95-100% of its investments in the constituents of the Nifty India Defence Index. The remaining 0-5% will be invested in money market instruments, debt securities, or units of debt/liquid schemes of domestic mutual funds. This ensures a balanced and diversified investment approach while focusing on the defense sector.

Benchmark and Fund Management

The scheme will be benchmarked against the Nifty India Defence Index – Total Return Index, ensuring investors can track its performance against a relevant standard. Abhishek Jain will manage the fund, leveraging his expertise to keep the tracking error minimal and ensure the fund closely mirrors the index’s performance.

Expense Ratio and Creation Unit Size

In line with Regulation 52(6)(c), the maximum permissible Total Expense Ratio (TER) for the fund is up to 1%. The ETF operates using a ‘Creation Unit Size,’ which consists of 16,000 units. This approach facilitates efficient creation and redemption of units in large blocks, maintaining liquidity and ease of transaction for institutional investors.

Investment Details

The minimum application amount for investors is Rs 500, with subsequent investments required to be in multiples of Re 1. Units will be allotted in whole numbers, with any remaining balance below the minimum amount refunded to the investor.

Suitability for Investors

The Groww Nifty India Defence ETF is ideal for investors seeking long-term capital appreciation through exposure to equity and equity-related instruments within the Nifty India Defence Index. The passive management strategy offers a straightforward way to invest in a diversified portfolio of defense sector stocks, aligning with the index’s performance while keeping expenses low.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.