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The scheme will follow portfolio allocation based on a top-down approach and bottom-up stock selection.

The last few months have been flooded with various financial instruments. These instruments are a part of a passive investment portfolio but were not passively sought by many of the retail investors until now.  The financial industry is overflowing with passive investment products from clean energy ETFs to ETFs tracking financial services index. Despite being in a nascent stage, ETFs in India has witnessed a boost in their assets flow in the last one year.

So, what changed in the last few months that led to a spurt in one of the passive instruments, i.e., Exchange Traded Fund or popularly known as ETFs. Covid acted as a stimulant for passive investments like gold ETFs, ETF’s and international investing in India, believes market experts.  “The boom in passive investment were seen as a major asset class creation during the pandemic,” pointed out Srikanth Subramanian-CEO, Private Wealth Investment Advisory Kotak Investment Advisors in a Motilal Oswal Global Partner Submit.

Mirae Asset Investment Managers (India) is the latest fund house to join the ETF’s bandwagon with the launch of India’s first -ETF tracking Nifty Financial Services Index – the ‘Mirae Asset Nifty Financial Services ETF’. The scheme is an open-ended replicating/tracking of the Nifty Financial Services Total Return Index. The NFO is open for subscription from July 22, 2021, and closes on July 29, 2021.

Investment strategy

Mirae Asset Nifty Financial services ETF will have exposure to 20 companies representing various segments of the Financial Services Sector. That said, the nifty financial services total return index has a sound history of over 16 years with a return of 18.3% per annum against 15.1% by NIFTY 50 Index and 14.6% by NIFTY Bank Index in the last five years.

Management views

As per the management, this scheme will offer investors the opportunity to participate in the sector that will augment the economy’s overall growth.

“Mirae Asset is striving to create a strong suite of passive products that will provide investors the option to take underlying index exposure in various segments of the market at low cost. In this effort, we are now launching Mirae Asset Nifty Financial Services ETF,” said Swarup Mohanty, CEO, Mirae Asset Investment Managers (India).

As per the AMC, financial services encompass not only banks but other industries such as NBFC (Non- Banking Financial Company), Insurance, Capital Market, etc., which are currently under-penetrated among the masses.

“While the financial services sector has grown at a great pace and financial inclusion across the board has improved, we still have a long way to go to reach even global averages. With the advent of new products and services backed by innovative technology, the scope of financial services is tremendous in coming years, which makes it a very compelling sector to take exposure in,” said Mohanty.

What should investors know?

The ETF attracts a total expense ratio of just 13 basis points and will be listed on both NSE and BSE. One should consult a financial planner to examine whether the product is suitable for them or not.
The minimum initial investment in the scheme during the NFO period required is Rs 5,000 and multiples of Re 1 after that.
This scheme is ideal for investors with an investment time horizon of at least five years.