NFO investment: SBI Mutual Fund has introduced SBI Nifty Bank Index Fund, an open-ended scheme designed to replicate the Nifty Bank Index. This scheme’s New Fund Offer (NFO) period commences on January 20, 2025, and concludes on January 31, 2025.
The Nifty Bank Index includes up to 12 companies listed on the National Stock Exchange (NSE). The fund will primarily allocate between 95% and 100% of its assets to stocks in the Nifty Bank Index, with up to 5% invested in Government securities such as G-Secs, SDLs, and treasury bills.
The minimum initial investment required is Rs 5,000, with subsequent investments allowed in increments of Rs 1. Investors can opt for daily, weekly, monthly, quarterly, semi-annual, or annual SIP to invest in the fund.
Harsh Sethi serves as the fund manager for SBI Nifty Bank Index Fund, having been with the fund house since May 2007. Currently, he oversees passive offerings like SBI Nifty IT ETF and SBI Nifty Consumption ETF.
Nand Kishore, MD & CEO, SBI Funds Management Limited, said: “The SBI Nifty Bank Index Fund provides investors with the opportunity to invest in the largest and most influential banks in India, which continue to lead and transform the nation’s banking sector.”
Baroda BNP Paribas Mutual Fund
Baroda BNP Paribas Mutual Fund has introduced a new offering, the Baroda BNP Paribas Energy Opportunities Fund, designed to tap into India’s energy sector growth potential.
The NFO for this fund will be available for subscription from January 21, 2025, to February 4, 2025. The primary objective of the Baroda BNP Paribas Energy Opportunities Fund is to enable investors to capitalize on the expanding energy sector in India amid its transition to a developed economy.
At least 80% of the fund’s assets will be allocated to equity instruments of companies involved in traditional and new energy sectors across various market capitalisations.
According to projections, India’s GDP is anticipated to increase by 1.9 times in the next five years, while energy demand is expected to rise by 1.7 times.
The energy sector holds significant weight in the Nifty 500 index, encompassing various industries.
The Nifty Energy TRI shows better price-to-earnings and price-to-book ratios, increased dividend yields, and faster earnings growth compared to the overall market.
The latest fund is compared to the Nifty Energy TRI, which has provided better returns than the Nifty 500 TRI consistently for 3, 5, 7, and 10-year periods (as of December 31, 2024).
The fund’s primary focus will be on opportunities within both the traditional energy chain (such as coal, crude oil, gas, and nuclear) and the emerging new energy transitions (including solar, wind, hydro, hydrogen, and geothermal sources).
The demand for energy in India is expected to increase significantly due to factors like a growing middle class, changing lifestyles, and government initiatives. These initiatives include plans to double the share of natural gas in the energy mix to 15% by 2030, as well as calling for annual bids for 50 GW of renewable energy capacity between fiscal years 2024-2028. There are also ambitious goals to substantially expand solar and wind power capacities by 2031-32.
Sanjay Chawla, Chief Investment Officer – Equity and Fund Manager, said, “The fund is ideal for equity investors with a holding period of three years or more. India’s energy story is powered by structural changes and government focus on improving energy security.”
Reforms in energy sector
In recent years, the energy sector has seen a series of reforms and announcements, demonstrating its importance to the economy. Some noteworthy initiatives include:
Production Linked Incentive (PLI) schemes for high-efficiency solar modules: These incentives aim to boost the production of high-efficiency solar modules.
National Solar Mission Rooftop Scheme: This initiative encourages the adoption of solar energy by promoting the installation of rooftop solar panels.
Viability Gap Funding for battery energy storage systems: This funding supports the development of battery energy storage systems, crucial for energy resilience and sustainability.
National Green Hydrogen Mission: This mission focuses on promoting the production and use of green hydrogen as a clean energy source.