HDFC Mutual Fund Launches NIFTY PSU Bank ETF

HDFC Asset Management Co. Ltd., investment manager to HDFC Mutual Fund (HDFC MF), one of India’s leading mutual fund houses, has announced the launch of the HDFC NIFTY PSU Bank ETF. This ETF offers a simple way to gain exposure to the PSU Bank sector. The captioned NFO opened on January 12, 2024, and will close on January 23, 2024.

India’s strong GDP growth, one of the highest among large world economies, is supporting credit growth. Banks are the backbone of economic growth, facilitating loans for various purposes such as capital expenditure, working capital, and individual purchases like homes and automobiles. Public Sector Undertaking (PSU) Banks have shown sustained improvement in their fundamentals over the past several years, including a decade-high Capital Adequacy Ratio (CRAR) and a substantial reduction in Gross Non-Performing Assets (GNPA) ratios. Despite these improvements, the valuations of PSU Banks may not be fully reflecting the improved fundamentals, creating a potential opportunity for investors who have a high-risk appetite.

The HDFC NIFTY PSU Bank ETF is a passively managed scheme that seeks to replicate the performance of the NIFTY PSU Bank Index, subject to tracking error. This ETF will give investors the benefit of diversified exposure to multiple PSU banking stocks through a single instrument. Furthermore, HDFC AMC brings its extensive expertise of managing Index Solutions to this ETF, with a track record of over 20 years of managing Index Solutions.

Commenting on the launch, Navneet Munot, Managing Director and Chief Executive Officer, HDFC Asset Management Co. Ltd. said, “With our ‘Investor First’ approach in mind, HDFC Mutual Fund continues to offer best in class investment solutions to the investors. We remain committed to delivering excellence in Index Solutions, leveraging our 20+ years of expertise in this space. We are pleased to introduce the HDFC NIFTY PSU Bank ETF, providing investors with an avenue to capitalize on the investment opportunities in PSU banks.”