SBI Nifty Bank Index Fund - Direct (G): NFO Details

resr 5paisa Research Team

Last Updated: 17th January 2025 - 05:29 pm

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The SBI Nifty Bank Index Fund - Direct (G) is an open-ended equity scheme managed by SBI Mutual Fund. Launched on January 1, 2013, the fund aims to replicate the performance of the Nifty 50 Index by investing in the same stocks and proportions as the index. The fund's portfolio is diversified across various sectors, with significant allocations in financial services, technology, energy, and consumer staples.


Details of the NFO: SBI Nifty Bank Index Fund - Direct (G)

NFO Details Description
Fund Name SBI Nifty Bank Index Fund - Direct (G) 
Fund Type Open Ended
Category Other Scheme –Index Fund
NFO Open Date 20-January-2024
NFO End Date 31-January-2024
Minimum Investment Amt ₹5,000
Entry Load -Nil-
Exit Load

0.25% for redemption within 15 days

Fund Manager Mr. Harsh Sethi
Benchmark NIFTY Bank TRI

Investment Objective and Strategy

Objective:

The investment objective of the scheme is to provide returns that correspond to the total returns of the securities as represented by the underlying index, subject to tracking error. 

However, there is no guarantee or assurance that the investment objective of the scheme will be achieved.

Investment Strategy:

The SBI Nifty Bank Index Fund - Direct (G) is a passively managed mutual fund that seeks to replicate the performance of the Nifty 50 Index. The fund achieves this by investing in the same stocks and maintaining the same weightages as the index, thereby aiming to mirror its returns.

As of December 31, 2024, the fund's portfolio is diversified across various sectors, with significant allocations in financial services (33.42%), technology (14.07%), energy (11.99%), consumer staples (8.01%), and automobiles (7.38%). The top holdings include HDFC Bank Ltd. (11.32%), Reliance Industries Ltd. (8.63%), ICICI Bank Ltd. (7.73%), Infosys Ltd. (5.82%), and ITC Ltd. (4.15%).

The fund maintains a low expense ratio of 0.20%, making it a cost-effective option for investors seeking exposure to large-cap Indian equities. It has delivered consistent returns, with a 1-year return of 6.76% and an average annual return of 12.55% since inception.

Why Invest in SBI Nifty Bank Index Fund - Direct (G)?

Investing in the SBI Nifty Bank Index Fund - Direct (G) offers several advantages:

Diversified Exposure: The fund invests in all 50 stocks comprising the Nifty 50 Index, providing investors with broad exposure to India's leading companies across various sectors. 

Cost Efficiency: With a low expense ratio of 0.20%, the fund minimizes costs, allowing investors to retain more of their returns. 

Consistent Performance: The fund has demonstrated consistent returns, delivering 6.76% over the past year and an average annual return of 12.55% since inception. 

Professional Management: Managed by experienced fund managers, the fund ensures adherence to its investment strategy and efficient tracking of the Nifty 50 Index. 

These factors make the SBI Nifty Bank Index Fund - Direct (G) a compelling option for investors seeking a low-cost, diversified investment aligned with the performance of India's premier stock index.

Strength and Risks – SBI Nifty Bank Index Fund - Direct (G)

Strengths:

The SBI Nifty Bank Index Fund - Direct (G) offers several strengths for investors:

Diversified Portfolio: The fund invests in all 50 stocks comprising the Nifty 50 Index, providing exposure to a wide range of sectors, including financial services, technology, energy, and consumer staples. 

Cost Efficiency: With a low expense ratio of 0.20%, the fund ensures that a minimal portion of returns is consumed by management fees, enhancing net gains for investors. 

Consistent Performance: The fund has demonstrated steady returns, delivering 6.76% over the past year and an average annual return of 12.55% since inception. 

Professional Management: Managed by experienced fund managers, the fund ensures adherence to its investment strategy and efficient tracking of the Nifty 50 Index. 

These attributes make the SBI Nifty Bank Index Fund - Direct (G) a compelling choice for investors seeking a low-cost, diversified investment aligned with India's leading stock index.

Risks:

Investing in the SBI Nifty Bank Index Fund - Direct (G) entails several risks that potential investors should consider:

Market Risk: As a passively managed fund that mirrors the Nifty 50 Index, the fund's performance is directly tied to the fluctuations of the Indian equity market. Economic downturns, geopolitical tensions, or adverse market events can negatively impact the fund's value. 

Sector Concentration Risk: The fund has significant exposure to certain sectors, notably financial services, which constitute approximately 33.42% of its portfolio. This concentration can heighten vulnerability to sector-specific downturns. For instance, recent challenges in the banking sector, such as Axis Bank's profit miss and asset quality concerns, have led to declines in bank stock prices, affecting the fund's performance. 

Tracking Error: While the fund aims to replicate the Nifty 50 Index, slight deviations, known as tracking errors, can occur due to factors like fund expenses or liquidity constraints. These discrepancies may result in returns that do not perfectly match the index. 

Valuation Risk: Elevated valuations in the Indian stock market can pose risks. For example, HSBC recently downgraded Indian equities to a 'neutral' rating, citing concerns over high valuations and slowing growth. Such assessments can lead to market corrections, impacting the fund's returns. 

Potential investors should assess these risks in line with their investment objectives and risk tolerance before committing to the SBI Nifty Bank Index Fund - Direct (G)

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