Aditya Birla Sun Life Mutual Fund launches Defence Index Fund; Know Is it Right Investment for You
Aditya Birla Sun Life Mutual Fund has launched a new investment avenue, the ABSL Nifty India Defence Index Fund. The New Fund Offer in this series opened on August 9, 2024, and closes on August 23, 2024. After the NFO period, the scheme shall reopen for regular purchases and redemptions within five working days from the date of allotment.
The ABSL Nifty India Defence Index Fund is an open-ended index fund that mirrors the NIFTY India Defence Index TRI. It would mean the fund takes an investment in stocks that comprise this index, thereby giving exposure to the defence sector in India.
This fund shall attract those investors who seek to get exposure to a government policy-driven industry with a low correlation to the broad market. The status of the defence sector in India comes within the top four globally on spending, after the US, China and Russia. This strong backing and strategic importance of the sector make it a very attractive sector for investment.
Investment Objective
The fund aims to generate returns corresponding to the total returns of the Nifty India Defence Total Return Index. However, returns will be subject to tracking errors; hence there is no guarantee that the Fund’s objective shall be achieved.
How to Invest?
Investors can invest with a minimum amount of Rs.500 and in multiples of Rs.100 thereafter. The fund will have a regular and direct plan. Applicants are required to indicate their choice on the application form. The plans have two options:
1. Growth
2. Income Distribution cum Capital Withdrawal IDCW
Comparisons in the Market
It is not the only mutual fund in this space. Other mutual funds, such as the Motilal Oswal and HDFC, have similar schemes targeted at the defence sector.
Performance
The performance of this fund shall be measured with the Nifty India Defence Total Return Index which would represent an explicit standard with which it would be compared.
Strategy on Asset Allocation
It will invest 95-100% in equity and equity-related securities of the Nifty India Defence Index. The remaining 0-5% shall be invested in debt, money market instruments and cash/cash equivalents. As of July 15, 2024, the main constituents of the index are Bharat Electronics, Hindustan Aeronautics, Solar Industries India, Cochin Shipyard, Mazagon Dock Shipbuilders, Bharat Dynamics, and Data Patterns.
Exit Load
The fund has an exit load of 0.05% of the applicable NAV in case of redemptions or switch-outs made within a period of 30 days from the allotment. Beyond this 30-day window, there are no exit charges.
Fund Management
The ABSL Nifty India Defence Index Fund will be managed by Haresh Mehta and Pranav Gupta, both with experience and expertise from their previous work, adding weight to the management of the fund.
Risk Consideration
As per the risk-o-meter of the fund, the scheme is very aggressive. Investors should appreciate that their principal investment will have a very high level of risk, and the scheme is suitable only for very high-risk tolerance investors.
Conclusion
The Aditya Birla Sun Life Nifty India Defence Index Fund is an emerging opportunity for investment in the nascent defence sector in India. With its high-risk factor, it would be suitable only for those investors who have a higher risk appetite to see their invested value fluctuate widely. As always, consider your goals and risk appetite before making any investment decision.
