SBI Mutual Fund Launches Two New PSU Bank-Focused Funds
SBI Mutual Fund launched two new open-ended schemes that cater to the investors’ appetite for public sector banks. Subscription for New Fund Offer (NFO) for SBI BSE PSU Bank Index Fund and SBI BSE PSU Bank ETF will open and run up to March 20, 2025 (Thursday).
These fresh funds are to replicate the BSE PSU Bank Index, giving investors access to top public sector banks. The BSE PSU Bank Index, a part of the larger BSE 500 Index, mirrors the performance of the major public sector banks on the stock exchange.
Market Performance and Investment Rationale
Even after the recent market correctives, S&P BSE PSU Index has seen a growth of 2.83% in the last month. Even on a year-to-date front, it fell by 10.38%. Investors who would like to invest or increase exposure of their portfolio in PSU shares can look into the new NFOs offered by SBI Mutual Fund.
SBI BSE PSU Bank Index Fund
The SBI BSE PSU Bank Index Fund is an open-ended mutual fund scheme that enables investors to mirror the performance of the BSE PSU Bank Index. The NFO will open on March 17, 2025 (Monday), and close on March 20, 2025. Investors can opt for regular or direct plans with a minimum investment of Rs. 5,000.
This ETF provides passive investors with a means to track the growth of PSU bank stocks in their portfolios. There can be tracking errors, though, and these can result in minor differences from the true performance of the BSE PSU Bank Index.
SBI BSE PSU Bank ETF
SBI BSE PSU Bank ETF is an exchange-traded fund (ETF) which will be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Investors can then freely trade units of ETF on the stock exchanges, offering flexibility to manage investments. With both an index fund and an ETF offering, SBI Mutual Fund will offer various investment options to those looking to gain exposure to public sector banks.
Who Can Invest?
Those with a long-term wealth growth objective who desire to follow the progress of public sector banks can invest in such funds. Nonetheless, it must be understood that index funds normally do not surpass the performance of the stock market but try to replicate its performance.
Both funds will invest up to 95% of their portfolio in securities included in the BSE PSU Bank Index. The balance of 5% will be invested in other financial instruments, including government securities and triparty repos.
Performance of PSU Banks and Investment Benefits
State-run banks have registered good financial health over the last few months, with most of them posting improved profits and sharp increases in non-performing assets (NPAs). Government-sponsored initiatives have also been a driving factor for the industry’s overall growth.
For investors who wish to invest in the banking industry but want to hedge against market risks, these SBI Mutual Fund NFOs provide a structured route. Index funds tend to have lower management charges than actively managed mutual fund schemes, which makes them an attractive choice for cautious investors.
Since the NFO is available for a short duration, investors who are keen to invest in PSU bank stocks through SBI Mutual Fund’s new schemes can consider reviewing these schemes prior to the closing date.
