Tata Mutual Fund has launched Tata Nifty ETF (exchange-traded fund), an open-ended scheme that will track the performance of Nifty 50 Index.The scheme will be benchmarked against the Nifty 50 Index, which is a well-diversified basket of 50 companies reflecting overall market conditions. The new fund offering (NFO) of the scheme began on December 17 and will end on December 19, 2018. Subsequent to the NFO, the ETF will trade on stock exchanges, like publicly-listed companies. The scheme will reopen not later than December 26, 2018.
Like a mutual fund, an ETF holds and tracks a basket of securities. This could include a commodity (like orange juice, oil), stock or could also track an index. One has to buy or sell units for an ETF from a stock exchange and intraday trading is also permitted.
Tata Mutual Fund’s new NFO shows a growing trend in the ETF space for the mutual fund industry. Recently, ICICI Prudential MF filed for a private bank ETF, SBI MF had an NFO for its Quality ETF, Mirae Asset MF also launched an NFO for Nifty 50 ETF.
The Nifty 50 Total Returns Index (TRI) has one-year returns of 7.82 percent and five-year returns of 13.39 percent. (As on Nov. 30, 2018). The benchmark index has majority of its investments in financial services (37.54 percent), followed by energy (14.48 percent), IT (13.91 percent) and consumer goods (10.84 percent).
Some of the top components of the index are HDFC Bank (10.54 percent), Reliance Industries (9.23 percent), Housing Development Finance Corporation (7.47 percent) and Infosys (5.86 percent).
The fund will be managed by Sailesh Jain, who joined Tata AMC from IDFC Securities in November this year. Jain also manages the newly launched Tata Arbitrage Fund and one of Tata’s top performing fund: Tata Digital India Fund. The Digital India fund has one-year returns of 38.54 percent. (As on Dec. 14, 2018)
Since the Nifty ETF scheme is a passive one, Jain’s role as a fund manager will be a limited one.
Key information about Tata Nifty ETF NFO:
| NFO period | December 17 – December 19, 2018 |
| Minimum application amount | Rs. 5,000 |
| Benchmark | Nifty 50 TRI |
| Fund manager | Sailesh Jain |
Other Funds by Tata Asset Management
| Scheme Name | 3Y Returns (%) | AUM (Rs. Cr.) | Category |
| Tata Digital India Fund | 21.92 | 111.56 | Sectoral/Thematic Fund |
| Tata Banking and Financial Services Fund | 18.01 | 253.91 | Sectoral/Thematic Fund |
| Tata India Consumer Fund | 17.4 | 973.5 | Sectoral/Thematic Fund |
| Tata Retirement Savings Fund Progressive Plan | 14.17 | 451.51 | Multi Cap Fund |
| Tata Index Sensex Direct | 14.14 | 5.04 | Large Cap Fund |
| Tata India Tax Savings Fund | 13.2 | 1398.27 | ELSS |
| Tata Index Nifty Direct | 12.23 | 11.08 | Large Cap Fund |
| Tata Retirement Savings Fund Moderate Plan | 12.09 | 659.89 | Aggressive Hybrid Fund |
| Tata Large & Mid Cap Fund | 11.46 | 1297.88 | Large & Mid Cap Fund |
| Tata Midcap Growth Direct Plan | 11.31 | 692.48 | Mid Cap Fund |
| Tata Large Cap Direct Plan | 10.75 | 799.42 | Large Cap Fund |
| Tata Ethical Direct Plan | 10.32 | 517.86 | Sectoral/Thematic Fund |
| Tata Equity PE Fund | 8.78 | 3519.81 | Value Fund |
| Tata Retirement Savings Fund Conservative Plan | 8.76 | 133.5 | Conservative Hybrid Fund |
| Tata Gilt Securities Fund | 8.01 | 117.76 | Gilt Fund |
| Tata Income Fund | 7.49 | 112.41 | Medium to Long Duration Fund |
| Tata Dynamic Bond Fund | 7.09 | 701.43 | Dynamic Bond Fund |
| Tata Hybrid Equity Fund | 6.91 | 5552.16 | Aggressive Hybrid Fund |
| Tata Liquid Fund | 6.9 | 15156.38 | Liquid Fund |
| Tata Equity Savings Fund | 6.24 | 214.93 | Equity Hybrid Saving Fund |
{Data as on Feb 20, 2020; Source: Value Research}