NFO Alert: SBI Mutual Fund Introduces SBI Nifty Bank Index Fund

SBI Mutual Fund has announced the launch of the SBI Nifty Bank Index Fund, an open-ended equity scheme that mirrors the performance of the Nifty Bank Index. The New Fund Offer (NFO) will open for subscription on January 20, 2024, and close on January 31, 2024, with the fund reopening for continuous sale and repurchase within 5 business days post-allotment.

Investment Strategy and Allocation

The fund employs a passive management approach, aiming to replicate the total returns of the Nifty Bank Index while minimising tracking errors. The asset allocation strategy is focused on investing 95-100% in securities covered by the index, with up to 5% in government securities or liquid mutual funds. This will help provide comprehensive exposure to the banks in India.

Costs and Flexibility

Investors can begin with a minimum application amount of ₹5,000 and make additional investments in multiples of ₹1 thereafter. For SIP (Systematic Investment Plan), options include daily, weekly, monthly, quarterly, semi-annual, and annual intervals. 

The scheme has no entry load, while an exit load of 0.25% applies for redemptions made within 15 days of allotment, which is waived for exits after this period.

Details and Management

The fund will be managed by Harsh Sethi and benchmarked against the Nifty Bank TRI. It is suitable for investors seeking long-term capital appreciation through a vehicle aligned with the performance of the country’s banking sector.

Portfolio Diversification

All in all, the SBI Nifty Bank Index Fund tracks the Nifty 50 Index, offering exposure to sectors like financial services, technology, energy, and consumer staples. It has an expense ratio of 0.20%, to focus on lower management costs. Approximately 33.42% of its portfolio is concentrated in financial services.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.