Mirae Asset Mutual Fund Launches Two New ETFs for Investors; Should You Invest?
The Mirae Asset Mutual Fund is introducing two new exchange-traded funds, of which the Mirae Asset Nifty Metal ETF and the Mirae Asset Nifty PSU Bank ETF are among them. These will allow investors to invest in focused exposure in some of the key sectors of India’s economy, such as the metal and the public sector banks (PSUs). This describes what investors may know about whether or not they should consider investing in them.
The scheme is an open-ended scheme aiming to provide returns replicating the Nifty Metal Total Return Index, expense-adjusted. The Index consists of 15 companies from the Indian metals and mining sector listed on the National Stock Exchange (NSE). The companies involved are significant players in the extraction, processing and distribution of a wide variety of metals including iron ore, steel, aluminium, zinc and copper. This fund permits investors to pursue either a tactical approach based on short-term trends in the metal and commodity markets or take a long-term approach aligned with India’s focus on infrastructure and manufacturing growth.
The second open-ended scheme tracks the Nifty PSU Bank Total Return Index. An index comprises PSU banks listed in the NSE, which have outperformed the private sector banks and other sectoral indices after factoring in improvements such as strengthening of asset quality, improved risk management and profitability in recent years. This ETF offers investors an affordable way to zero in on their focus on PSU banking which plays a critical role in the economic growth and financial inclusion of India in rural and semi-urban areas.
The New Fund Offer for Mirae Asset Nifty Metal ETF opened on September 20, 2024. Closing of the New Fund Offer is on September 30, 2024. It is open for the purchase and redemption of units in the ETF from October 04, 2024.
NFO of Mirae Asset PSU Bank ETF opens on 24th September 2024 and closes on 30th September 2024. Continuous sale and repurchase offered on 03, October 2024.
The minimum initial investment for both funds will be Rs.5,000 and all further investments will be accepted in multiples of Re.1 during the NFO period. The funds will be managed by highly experienced fund managers with a proven track record in managing ETF products.
For investors wanting to tap into the met and commodity cycle and looking at this as an opportunity to grow from a short-term tactical position or holding a long-term view on India’s infrastructure and manufacturing growth, the Mirae Asset Nifty Metal ETF may look like the right option. Along with the heavy investment made by India in these sectors, it would be metal that would continue to remain at the core of the economy for several years ahead and therefore hold the potential for growth ahead.
The PSU Bank ETF has, however, given focused exposure to the public sector banking space that has exposed really strong signs of recovery and profitability in recent years. With much improvement now seen in asset quality and risk preparedness, the banks are well-poised for continued growth. Public sector banks, being virtually ubiquitous in the rural and semi-urban pockets, are also considered to be drivers of financial inclusion and a tectonic push for the Indian economy. While this ETF may not afford broader banking exposure through an index, it gives the investor a cheap, concentrated play on the PSU banking sector.
But both have specific opportunities for investors to gain exposure to sectors that are likely critical for India’s long-term growth. The sector underpinning metals thrust is likely to benefit from the country’s thrust on infrastructure expansion, and PSU banks have quite seen impressive turns of fortunes in the last couple of years, not just by way of improving profitability but also in terms of asset quality.
These kinds of funds are suitable for investors who clearly visualize the metal and PSU bank sectors and would look for focused, low-cost investments. Of course, one needs to study one’s risk tolerance and time horizon, as well as the overall portfolio goals, before investing.
Therefore, what investors are getting is the opportunity of either short-term tactical trade or long-term investment depending on what objectives they have. Such funds need to form an investor’s diversified portfolio.
