The fund is designed to track the performance of the NSE IT index which tracks the 10 largest IT companies by free-float market capitalization listed on the NSE.
Axis Mutual Fund has launched Axis Technology ETF, an open-ended exchange-traded fund tracking NIFTY IT Index. The NFO will close on March 23, 2021. The fund seeks to track returns by investing in a basket of NIFTY IT Index stocks and aims to achieve returns of the stated index, subject to tracking error. As per the product document, the fund is suitable for investors who are seeking long term wealth creation solution and falls in the ‘very high risk’ category.
The minimum investment is Rs. 5,000 and its benchmark is Nifty IT TRI Index. The fund is designed in a manner that it tracks the performance of the NSE IT index – which tracks the 10 largest IT companies by free-float market capitalization listed on the NSE.
This makes it a Sectoral Fund and the fortunes of the technology sector will largely determine the performance of this fund. After the outbreak of Covid-19, the technology sector has witnessed steady growth. The lockdown across countries, corporates leading to restricted movements put the digital economy on the front.
Axis Technology ETF, being an ETF, the units will be traded on the stock exchange during the trading hours. Further, it is a passive fund and will replicate the index that it tracks. Globally, passive funds have been the fastest-growing investment segment over the last several years as investors have warmed up to their simplicity and low-cost efficient structures.
In India as well, Passive investing has been gaining ground over the last few years primarily due to wider participation of retirement trusts and greater investor awareness and maturity. Passive funds are essentially designed to track the performance of an index. They achieve this by replicating the portfolio of the underlying index. This allows passive funds to offer transparent, low churn portfolios at an extremely low cost to the investors.