India’s biggest asset management company SBI Mutual Fund has announced the launch of its new thematic fund – SBI Automotive Opportunities Fund.
The new fund offer, an open-ended equity scheme following automotive and allied business activities theme, will open on May 17 and close on May 31, 2024.
SBI Automotive Opportunities Fund is benchmarked against the Nifty Auto TRI – which has seen a whopping 266% rise in 10 years and 183% in 5 years.
“The investment objective would be to generate long-term capital appreciation to unit holders from a portfolio that is invested in equity and equity related instruments of companies engaged in automotive and allied business activities from the domestic as well as global universe,” SBI Mutual Fund said in a statement.
“However, there can be no assurance that the investment objective of the Scheme will be realized. The fund would be benchmarked to the Nifty Auto TRI,” it added.
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The fund would predominantly invest 80-100% of its assets in equity and equity-related instruments of companies engaged in automotive and allied business activities theme (including equity derivatives), with the balance assets as per the following allocation: (a) 0–20% in equity and equity-related instruments of companies other than above (including equity derivatives) (b) 0–20% in debt and debt-related instruments (including securitized debt {upto 20%} and debt derivatives) and money market instruments including tri-party repos (c) 0–10% in units issued by REITs and InvITs, with the exposure in line with SEBI limits specified from time to time.
The fund may seek investment opportunities in foreign securities including ADR/GDR/Foreign equity and debt securities and overseas ETFs subject to regulations. Such investment may not exceed 35% of the net assets of the scheme and will be in line with the maximum limits available from time to time.
Shamsher Singh, Managing Director and CEO, SBI Funds Management, said, “Today India is the world’s 3rd largest automobile market. The Indian Automotive sector presents an attractive opportunity as domestic demand and auto exports have been drivers of growth.”
Electric mobility and rise of logistics and passenger transportation provide inflection points for the industry. The SBI Automotive Opportunities Fund is a wonderful opportunity for investors who would like to benefit from the growth of the entire automotive ecosystem as this sector is poised to take India to new places, the CEO said.
D P Singh, Deputy MD and Joint CEO, SBI Funds Management, said, “I am pleased to present the SBI Automotive Opportunities Fund to investors who are keen to add a thematic offering to the satellite portion of their portfolios. The Indian automotive industry is running in top gear as our country is a force to be reckoned with in terms of production of vehicles and auto exports while our burgeoning domestic market demands safer and premium vehicles.”
In addition, manufacturing of auto parts and ancillaries contribute to almost 30% of the manufacturing ecosystem providing wealth creation opportunities for investors in the long-term, he said. Policy reforms and a defined roadmap with the industry provide momentum and an opportunity for investors to benefit from India’s growing automotive ecosystem.