ICICI Prudential Nifty Commodities ETF is an open-ended Exchange Traded Fund replicating the Nifty Commodities Index, the company said in a statement. The New Fund Offer (NFO) of the scheme opened today (December 14, 2022) and it will close on December 15, 2022. However, there is no assurance or guarantee that the scheme’s objectives will be met.
“The commodity market has always been one of the most attractive investment asset classes. The demand for commodity inputs, categorized as hard and soft commodities, generally remains high as they fuel the economic growth of the country. Investors looking for commodity exposure in their portfolio can consider ICICI Prudential Nifty Commodities ETF,” Chintan Haria, Head- Product Development & Strategy, ICICI Prudential AMC, said.
What is Nifty Commodities Index?
The Nifty Commodities Index has given a return of 11.93% since November 2012. According to the AMC, Rs 1 lakh invested in the Nifty Commodities Index in 2012 would be worth around Rs. 3.08 lakhs by the end of November 2022.
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The index has been designed to reflect the behaviour and performance of a diversified portfolio of companies representing the commodities segment, including sectors like oil, petroleum products, cement, power, chemical, sugar, metals and mining.
Who will benefit from ICICI Prudential Nifty Commodities ETF?
The new ETF from ICICI Prudential MF may provide an opportunity to investors who want to make the most from the expected strong growth in the commodities sector. According to the AMC, Nifty Commodities ETF offers a chance to benefit from the following:
Strong demand: With strong deals pipeline and increased domestic capacities, the demand outlook looks positive.
Helps to tackle inflation: Commodity prices tend to be positively correlated with inflation leading to higher profits during inflationary periods.
Diversification: Commodities are not highly correlated with each other which helps in absorbing market shocks.
High Dividend: Empirically such companies are high dividend paying.
High infrastructure capex: Unprecedented expenditure on infrastructure augurs well for domestic commodity manufacturers.
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Nifty Commodities Index Portfolio
Nifty Commodities Index includes companies dealing in Oil, Petroleum Products, Cement, Power, Chemicals, Sugar, Metals and Mining. The universe for stock selection is based on the Nifty 500. The index will be rebalanced semi-annually on January 31st and July 31st.
The top 10 holdings of the index include Reliance Industries (RIL), Tata Steel, NTPC, UltraTech Cement, Adani Green Energy, JSW Steel, Grasim Industries, Hindalco, ONGC and Coal India.
(Disclaimer: The above information is based on the announcement by ICICI Prudential AMC. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing)