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

resr 5paisa Research Team

Last Updated: 4th February 2025 - 10:57 am

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The SBI Nifty IT Index Fund - Direct (G) is an open-ended scheme designed for investors seeking exposure to the Indian Information Technology (IT) sector. The fund aims to replicate the performance of the Nifty IT Index by investing in its constituent stocks in the same proportion. By following a passive investment strategy, the fund strives to provide returns aligned with the index while minimizing tracking errors. Although returns are not guaranteed, this scheme offers investors an opportunity to participate in the growth of India's leading IT companies.

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

NFO Details Description
Fund Name SBI Nifty IT Index Fund - Direct (G)
Fund Type Open Ended
Category Other Scheme - Index Fund
NFO Open Date 4 February 2025
NFO Close Date 17 February 2025
Minimum Investment Amt ₹5,000/-
Entry Load -Nil-
Exit Load -Nil-
Fund Manager Harsh Sethi
Benchmark NIFTY IT Index

Investment Objective and Strategy


Objective:
The SBI Nifty IT Index Fund - Direct (G) seeks to replicate the total returns of the Nifty IT Index, subject to tracking error. By maintaining the same weightage for each stock as in the index, the fund aims to closely match the performance of India's leading IT companies. However, there is no assurance or guarantee that the scheme’s investment objective will be fully achieved.


Investment Strategy:
The fund follows a passive investment strategy, meaning it does not actively select stocks but instead mirrors the Nifty IT Index by holding its constituent stocks in the same proportion.

  • The fund will invest 95% to 100% of its assets in the stocks of the Nifty IT Index.
  • Up to 5% of assets may be allocated to government securities, treasury bills, State Development Loans (SDLs), triparty repo, and liquid mutual fund units for liquidity management.
  • The portfolio will be rebalanced periodically to ensure alignment with changes in the index composition.

    Although the fund aims to minimize tracking errors, variations may occur due to factors such as market volatility and operational constraints.

Strengths and Risks - SBI Nifty IT Index Fund - Direct (G)


Strengths:

  • Sector-Specific Exposure: The fund provides direct exposure to India's IT sector, which is a key driver of the economy and global outsourcing.
  • Lower Cost: As a passive fund, it generally has a lower expense ratio compared to actively managed funds.
  • Simplified Investing: Investors gain exposure to 10 of India's top IT companies without needing to pick individual stocks.
  • Growth Potential: The Indian IT sector continues to benefit from digital transformation, global outsourcing demand, and technological advancements.

Risks:

  • Tracking Error: The fund's performance may deviate from the index due to rebalancing delays or operational factors.
  • Market Volatility: Since the fund mirrors the Nifty IT Index, it is subject to fluctuations in the IT sector’s performance.
  • Lack of Active Management: The fund does not actively respond to market opportunities or risks, which may limit its ability to outperform the index.
  • Sector-Specific Risk: Being a sectoral fund, it lacks diversification across industries, making it more vulnerable to downturns in the IT sector.
     

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


The SBI Nifty IT Index Fund - Direct (G) is an attractive option for investors looking to benefit from the long-term growth potential of India's IT sector. By replicating the Nifty IT Index, the fund offers diversified exposure to large IT companies engaged in software development, hardware, IT services, and related fields.

  • Cost-Effective: Passive funds typically have lower expense ratios compared to actively managed funds.
  • Flexible SIP Options: Investors can invest systematically with timely SIP plans.
  • Convenient and Transparent: The fund provides a straightforward way to invest in the IT sector without requiring active stock selection.
  • Long-Term Growth Potential: With digital transformation and global IT demand on the rise, the Indian IT sector is poised for continued expansion.

 

This fund is particularly suitable for investors with a long-term investment horizon who want to gain sector-specific exposure while benefiting from the convenience of index-based investing.


Disclaimer: This article is for educational purposes only and does not constitute investment advice.
 

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