With India being on track to become a Global Hub of IT, this IT ETF will allow investors to tap into the growth potential of the top IT companies: Experts.
Aditya Birla Sun Life AMC has announced the launch of Aditya Birla Sun Life Nifty IT ETF, an open-ended exchange-traded fund that will track the Nifty IT TRI (Total Return Index). The New Fund Offer (NFO) opened for subscription on October 20, 2021, and will close on October 28, 2021.
The Nifty IT index is computed using the free-float market capitalization method with a base date of Jan 1, 1996. This index acts as a benchmark for the performance of the Indian IT sector and comprises 10 marquees IT companies listed on the National Stock Exchange (NSE).
The minimum application amount for this fund is Rs 500 and in multiples of Rs 100 thereafter, during the NFO.
It is predominantly a large-cap index and is rebalanced every quarter by ensuring that no single stock is more than 33 per cent and the weightage of top 3 stocks cumulatively are not to be more than 62 per cent at the time of rebalancing. Nifty IT has outperformed broad-based indices across periods.
A. Balasubramanian, Managing Director and CEO, Aditya Birla Sun Life AMC Limited says, “Over the years, India has established itself as a preferred destination for IT and Business Process Management services, with the sector contributing almost 44 per cent of FDI inflows in India in 2021 (Source: Gartner, Indian Brand Equity Foundation (IBEF) / As on August 2021).”
He further adds, “It is estimated that the Indian IT sector has the potential of becoming a $350 billion industry in annual revenues by 2025 as per a report by Nasscom. The Government is also incentivising the sector by not only fast-tracking the Digital India initiative but also introducing schemes like MeitY, SAMRIDH and PLI. All this will significantly benefit the sector.”
It might be noted that India is projected to have 900 million active Internet users by 2025. From e-commerce and fintech to cloud computing and social media, growth is being witnessed in all segments. Additionally, experts believe by 2035, the adoption of new-age technologies is expected to boost India’s annual growth rate by 1.3 per cent. Coupled with acceleration in the pace of digital transformation, IT companies are well-poised to continue their strong growth trajectory.
Balasubramanian adds, “Amid the pandemic, the sector demonstrated its defensive nature by reporting strong business growth, and also gave stellar returns. With India being on track to become a Global Hub of IT, Aditya Birla Sun Life IT ETF allows investors to tap into the growth potential of the top IT companies.”