Nippon India Mutual Fund has launched two new passive funds on Nifty auto and realty indices. Both the funds will invest in the securities of their respective underlying indices.
Passive funds have several inherent advantages for investors, such as low cost, diversification through a single unit and transparency, as both the funds will mirror their respective indices.
The automobile sector accounts for 7 per cent of the country’s GDP and is characterized by its diversity, including manufacturers of passenger vehicles, commercial vehicles, three-wheelers, two-wheelers and automotive components.
Government initiatives such as Production Linked Incentive scheme, Automotive Mission Plan and PM E-Drive will have significant impact on growth of the sector in both conventional automobile vehicle and Electric Vehicles space.
The Nifty Auto Index has delivered CAGR of 49 per cent in last one year against 28 per cent delivered by Nifty 50 as on October-end. Further, the Nifty Auto has also outperformed Nifty 50 in 3 and 5 year periods.
The Indian Real estate sector accounts for 7 per cent of the GDP and serves as the second largest employment generator, accounting for 18 per cent of total employment. The real estate market is projected to have a multifold growth in the next two decades and expand its contribution to GDP to 11 per cent by 2034.
The Nifty Realty Index has delivered CAGR of 66 per cent in last one year outperforming Nifty 50 TRI over 2 times in the same period and outperformed across 3, 5 and 10 year period.
Arun Sundaresan, Head ETF, Nippon India MF said the combination of plethora of government policies, increasing income levels, urbanization, favourable demographics and a burgeoning middle class with enhanced purchasing power along with improved access to financing options, serves as a crucial catalyst for the growth in both the sectors.
The NFOs will close on November 28.
