DSP MF launches Nifty Private Bank Index Fund, will track 4 pvt lenders

DSP Nifty Private Bank Index Fund presents tax-efficient way to access private banking sector without investing directly in such stocks, says company

DSP Mutual Fund has launched an open-ended scheme that replicates the Nifty Private Bank Index. New fund offer (NFO) for the DSP Nifty Private Bank Index Fund is open from February 14 to February 28.

 

The fund is designed to provide investors with a focused investment opportunity in India's private banking sector, which has demonstrated consistent growth and profitability over the years, said the fund house in a press statement. DSP Nifty Private Bank Index Fund invests in India’s four largest private sector banks, which collectively constitute approximately 80 per cent of the index. Subscribers can opt for lump-sum investments or systematic investment plans (SIPs) based on their financial goals.

 

 

“DSP believes that the concentration of larger banks within the Nifty Private Bank Index can be an advantage. Customers tend to trust and prefer larger banks more than other smaller peers. This facilitates higher credit growth, better access to capital and economies of scale – thereby helping these banks sustain and grow further,” said the statement.

 

“We believe the concentration of larger banks within the Nifty Private Bank Index can be an advantage, mirroring global trends where leading banks tend to demonstrate sustainable growth due to customer trust, access to capital, and economies of scale. This fund offers investors a streamlined approach to participate in the potential of India's private banking sector,” said Anil Ghelani, head of passive investments & products at DSP Mutual Fund.

 

Private banking’s market share has doubled in two decades. Since 2001, private banks have maintained strong balance sheets and profitability. However, the Nifty Private Bank Index has underperformed in recent years compared to the broader Nifty 50. Additionally, the current valuations of several index constituents remain below their 10-year average,

 

“The DSP Nifty Private Bank Index Fund presents a tax-efficient way to access the private banking sector unlike investing directly in these stocks, as owning through a mutual fund does not incur capital gains tax while rebalancing between them or on receipt of dividends. Furthermore, current valuations of several index constituents are below their historical averages, potentially offering investors an attractive entry point,” said Diipesh Shah, Fund Manager at DSP Mutual Fund.

 

More about DSP Nifty Private Bank Index Fund

 

Investment objective: The investment objective of the Scheme is to generate returns that are commensurate with the performance of the Nifty Private Bank Index, subject to tracking error. There is no assurance that the investment objective of the Scheme will be achieved.

 

Benchmark details: Nifty Private Bank TRI.

 

Minimum investment: The minimum application amount for both regular and direct plans is Rs 100 for the first purchase and any amount thereafter for subsequent purchases.

 

Exit load: Nil

 

Anil Ghelani and Diipesh Shah will manage the fund

 

Expense ratio regular plan: Up to 1.0 per cent*

 

Direct plan:  Up to 0.4 per cent*

 

* Expense ratio is subject to change in future depending on various factors