HDFC MF launches sectoral exchange-traded funds Nifty IT and Nifty Private Bank

The new fund offers opened for subscription on 28 October and will close on 9 November 2022.

According to the fund house, HDFC Nifty IT ETF has the potential to capture global IT demand and requirements through India’s leading IT companies, while HDFC Nifty Private Bank ETF aims to captures the potential of private banks benefitting from India’s economic growth.

The HDFC Nifty IT ETF seeks to benefit from structural tailwinds in tech spending including growth of cloud computing, while the HDFC Nifty Private Bank ETF offers exposure to private banks which have better fundamentals relative to sector peers and valuations below long-term averages.

Both the funds consist of the 10 largest stocks in the respective sectors listed on NSE, and they are rebalanced semi-annually in March and September.

The objective of the funds is to provide investment returns that, before expenses, correspond to the total returns of the securities as represented by the Nifty IT Index and Nifty Private Bank Index, respectively, subject to tracking errors.

Both the funds will be managed passively with investments in securities covered by the underlying index.

Navneet Munot, managing director and chief executive officer, HDFC Asset Management Co. Ltd. said, “HDFC AMC has been one of the oldest players in index solutions with proven capability, giving a definite edge. Launch of HDFC Nifty IT ETF and HDFC Nifty Private Bank ETF are a natural extension to include these sector ETFs as part of our endeavour to offer diversified product bouquet for our investors”.

The top five constituents in terms of weightage in the NIFTY IT index are Infosys Ltd. (27.42%), Tata Consultancy Services Ltd. (26.30%), HCL Technologies Ltd. (9.51%), Tech Mahindra Ltd. (8.72%) and Wipro Ltd. (8.14%).

The Nifty IT Total Return index has delivered -14.7% returns on a one-year basis.

When it comes to the Nifty Private Bank Index, the top five stocks in terms of weightage are ICICI Bank Ltd. (25.14%), HDFC Bank Ltd. (24.97%), Axis Bank Ltd. (12.90%), Kotak Mahindra Bank Ltd. (11.10%) and IndusInd Bank Ltd. (10.30%).

The total return index of Nifty Private Bank has gained 5.66% on a one-year basis.