Tata Mutual Fund launches India’s first Tourism Index Mutual Fund; Know All about it
Tata Mutual Fund stated that the company has come out with an open-end equity scheme, namely, the Tata Nifty India Tourism Index Fund, which constitutes a sectoral or thematic style.
The scheme opened for subscription to the public on July 8, 2024, and closed on July 19, 2024. Also, you should know that the scheme only opens for further subscriptions and repurchases after July 29, 2024.
It seems to be a mutual fund scheme, but what type of category is this?
It is a totally flexible equity scheme that follows the special situations theme.
At the launch of the index fund, a chief business officer of Tata Asset Management said, “High disposable income, better highway connectivity, railway comfort and speed and new airports have made it easy, swift and safe to travel, causing rapid growth in domestic aviation, hotels, restaurants and travel, which is very favourable for the tourism sector. All types of travel including pilgrimage, business, medical, and leisure trips are on the rise, thereby making a strong.”
What motives are there for investing in this fund type?
The investment focus of the scheme is to allow the value of the fund’s investments to rise or fall in line with the TRI within the limits of tracking error with respect to the Nifty India Tourism Index. However, there is no guarantee that the investment objective of the scheme will be achieved in the same sense. It does not in any way guarantee or promise the participants any amount of money back.
The Tata Nifty India Tourism Index Fund was launched at a time when the current performance of the Indian economy has been phenomenal in terms of investment and consumption. India has the largest population of middle-class people and this has led to increased numbers of inspirational as well as experiential travellers, boosted by an increase in investment in infrastructural development where facilities and capacities of air routes have increased, hence making travel relatively easier.
In what ways can one qualify for and participate in this scheme?
Investors can expand their investments under the scheme with a minimum investment of Rs.5000 per plan or option and in multiples of Re 1. Notably, there is no maximum amount that a company can invest in the development of its products.
In line with the investment allocation pattern of the scheme, the scheme will invest in:
- Equity or its related products and/or options.
- Debt and other money market instruments.
- Domestic mutual fund units.
During normal circumstances, the investment range would be as follows:
| Type of Instruments | Asset Allocation (% of Net Assets) |
Risk Profile |
|
|
Minimum |
Minimum |
||
| Securities covered by the Nifty India Tourism Index |
95% |
100% |
Very High |
| Debt / Money Market Instruments including units of mutual funds |
0% |
5% |
Low |
Does the market contain similar mutual funds?
Till now, AMC has not started any fund in this category.
In this regard, how will the scheme benchmark its performance that has been proposed as a mechanism of disbursement amongst the target beneficiary groups?
The benchmark index used in the evaluation of the Scheme’s performance is the Nifty India Tourism Index Fund (TRI). As per the investment being made in accordance with the investment objective of the scheme, the investment would preferably be made in those securities that are a part of the Nifty India Tourism Index. Therefore, the structure of the aforementioned benchmark index is such that it is most appropriate to use when comparing the performance of the scheme.
Is there any entry or exit load in this particular scheme?
This scheme is called the ‘No Entry Load’, implying that to deposit their earnings, investors are not required to part with any amount. The “Exit Load” would be calculated as follows: 0.25% of the applicable NAV.
The exit load (if any) charged to the unit holders by the mutual fund on redemption (including switch-out) of units shall be credited to the scheme net of GST. In the event that an exit load is applicable, GST on the same shall be borne from the proceeds of the said load.
What does the fund involve that is regarded as a risk?
The scheme entails “very high risk,” as stated in the scheme information document, and clients who invest in it only expect their principal to be at very high risk. However, investors can consult their financial advisors if they have any issues with the suitability of the given product.
