The new fund offer or the NFO of the scheme is open for subscription and it will close on October 18. The scheme will re-open for continuous sale and repurchase from October 23.
The investment objective of the scheme is to generate returns, before expenses, that are commensurate with the performance of the Nifty IT Total Return Index, subject to tracking error.
The performance of the scheme will be benchmarked against Nifty IT TRI (Total Return Index) . The scheme will be managed by Ekta Gala, and Vishal Singh.
The minimum application amount is Rs 5,000 & in multiples of Re 1 thereafter. The scheme will allocate 95-100% of its assets in the securities included in the Nifty IT Index, 0-5% in money market instruments / debt securities, instruments and/or units of debt/liquid schemes of domestic mutual funds.
The Mirae Asset Nifty IT ETF will be managed passively with investments in stocks in the same proportion as in the Nifty IT Index. The investment strategy of the scheme will be to invest in a basket of securities forming part of Nifty IT Index in similar weight proportion. The investment strategy would revolve around reducing the tracking error to the least possible through regular rebalancing of the portfolio, considering the change in weights of stocks in the index as well as the incremental collections/redemptions in the scheme. A part of the funds may be invested in debt and money market instruments, to meet the liquidity requirements. According to the scheme information document, the scheme is recommended for investors with an investment horizon of three years or more. The scheme is suitable for investors who are seeking returns that commensurate with performance of Nifty IT Total Return Index, subject to tracking error over long term and want investments in equity securities covered by Nifty IT Total Return Index. The principal invested in this scheme will be at very high risk according to the riskometer of the scheme. Should you invest?
ETMutualFunds always ask investors to invest in an NFO only if it offers something unique – that is, some investment option that is not available in the market or adding something to the existing available option.
There are around six Nifty IT ETFs that have completed one year in the market. Two schemes have been around for three years. These schemes offered an average return of 17.30% in one year. Two schemes – ICICI Prudential Nifty IT ETF and Nippon India ETF Nifty IT- have a performance record of around three years. ICICI Prudential Nifty IT ETF and Nippon India ETF Nifty IT have offered 14.76% and 14.78% respectively.
DSP Nifty IT ETF is relatively new in the category. The scheme was launched in July this year.
The benchmark Nifty IT -TRI has a long performance record of around 20 years. The benchmark offered 17.06% in 20 years, 15.09% in three years, and 17.59% in one year.
Sector schemes like IT funds are recommended to experienced investors with knowledge about the IT sector and are keen to invest in the sector to create wealth over a long period. Sector schemes are not recommended to new and risk-averse investors as sector funds often become extremely volatile and they also go through sluggish phases. Investors can bet on active or passive IT schemes like ETFs based on their preference. Active IT schemes have a long history, whereas ETFs have limited history.
