Tata Asset Management launches 6 innovative index funds aimed at growth sectors – Key details inside

Tata Asset Management Company on Monday announced the launch of six innovative index funds designed to provide investors with exposure to key sectors having growth potential in the current economic landscape.

These six funds are Tata Nifty 500 Multicap 50:30:20 Infrastructure Index Fund, Tata Nifty MidSmall Healthcare Index Fund, Tata Nifty Realty Index Fund, Tata Nifty Financial Services Index Fund, Tata Nifty Auto Index Fund and Tata Nifty 500 Multicap India Manufacturing 50:30:20 Index Fund.

The new fund offers (NFOs) for these six schemes will remain open from April 8-22, 2024. The minimum investment during the NFO period has been fixed at Rs 5,000.

Of these six index funds, three are industry firsts: Tata Nifty MidSmall Healthcare Index Fund, Tata Nifty 500 Multicap India Manufacturing 50:30:20 Index Fund and Tata Nifty 500 Multicap 50:30:20 Infrastructure Index Fund.

Also Read: Mutual fund: Key things to keep in mind while investing in a MF scheme

Following are the six index funds and their details:

Tata Nifty 500 Multicap 50:30:20 Infrastructure Index Fund:

The scheme aims at replicating the performance of the Nifty 500 Multicap Infrastructure Index with a strategic allocation ratio of 50:30:20 across large-cap, mid-cap, and small-cap companies. With public capital expenditure in infrastructure witnessing a significant surge and factories operating at optimal levels, this fund presents an opportune investment avenue for those seeking exposure to India’s burgeoning infrastructure sector.

Tata Nifty MidSmall Healthcare Index Fund:

The healthcare index fund mirrors the Nifty MidSmall Healthcare Index, capitalizing on the favorable factors driving the healthcare industry, including robust margins, stable pricing pressures in international markets, and increasing health consciousness among consumers.

Tata Nifty Realty Index Fund:

The index fund is positioned to tap into the thriving real estate sector. This fund tracks the Nifty Realty Index, potentially benefiting from factors such as soaring residential demand, rapid sales velocity, and a resilient balance sheet post-RERA implementation.

Tata Nifty Financial Services Index Fund:

This fund aims to replicates the NIFTY Financial Services Index (TRI), offering exposure to a diverse range of financial services companies poised for potential growth. The Indian banking industry is currently witnessing remarkable growth, underscored by its strong asset quality and robust performance metrics. With a low default rate of 2.9%, attributed to minimal Gross Non-Performing Assets (GNPAs), the sector showcases resilient asset quality.

Tata Nifty Auto Index Fund:

The fund seeks to replicate the Nifty Auto Index and is designed to reflect the behaviour and performance of the automobiles sector which includes manufacturers of cars, motorcycles, heavy vehicles, auto ancillaries. The Indian automotive industry is poised for potential growth in the next decade, driven by favorable demographics, increasing disposable incomes, rapid urbanization, and accessible credit. With mobility becoming perceived as a necessity, rather than a luxury, vehicle ownership is swiftly following suit, reflecting evolving consumer aspirations.

Tata Nifty 500 Multicap India Manufacturing 50:30:20 Index Fund:

With India’s significant advancements, including its improved ranking in the World Bank’s Ease of Doing Business, driven by initiatives such as GST implementation, performance-linked investment scheme, RERA policy, and digitalization, the manufacturing landscape presents compelling opportunities for investors. Moreover, the fund’s focus on top-performing stocks from diverse sectors within the manufacturing theme aligns with India’s trajectory towards becoming a manufacturing powerhouse.

Commenting on the launch of these funds, Anand Vardarajan, Business Head at Tata Asset Management, said: “There is a saying ‘skate to where the puck is going, not where it has been’. It is instructive for an investor to then see where money is being spent today. More often than not, where the rich spend today, the middle class may spend tomorrow. In that context we have come up with 6 index funds which could participate in the overall India growth story.”

“The decision to introduce these index funds is backed by rising income levels and compelling consumer trends. Rising auto demand with sustainability and green energy are powering the growth of this sector. Factories are operating at near-maximum capacity, indicating near peak production capacity spurring manufacturing growth. The healthcare industry presents potential opportunities driven by strong margins, stabilized pricing pressures in international markets, and increasing health awareness,” he added.

The real estate sector is buoyed by robust residential demand, rapid sales velocity, and a resilient balance sheet post-RERA implementation and the BFSI sector has demonstrated resilience amidst various challenges, potentially benefitting from economic growth, increased disposable incomes, and technological advancements, according to Varadrajan.

“Infrastructure connectivity increases ease of travel and presents a good long-term potential for growth. All these augurs very well from a long-term investment portfolio perspective,” he noted.