It offers an opportunity to invest in liquid and large Indian Banking stocks at reasonable valuations
FinTech BizNews Service
Mumbai, May 15, 2024: DSP Mutual Fund announced the launch of DSP Nifty Bank Index Fund, an open-ended scheme tracking Nifty Bank Index. The Fund offers investors an opportunity to get exposure to the 12 most liquid and large Indian banking stocks through a single fund. Nifty Bank Index is diversified with a composition of private as well as public sector banks.
Historically, the Nifty Bank Index has delivered much better long-term returns compared to the broader Nifty 50 Index. Since January 2000, the Nifty Bank Index has grown 67 times compared to the Nifty 50 which grew 21 times over the same period.* However, the Nifty Bank Index is currently witnessing the longest stretch of underperformance compared to the Nifty 50 on a 5-year rolling basis which has led to it being relatively better placed in terms of sector valuations versus their own historical averages as well as relative to other sectors.
Key financial metrics for banks like return ratios and capital adequacy have also been improving steadily. Return on Assets (RoAs) of Indian banks have improved over 3 times from the lows of 2018**. NPAs are also at one of the lowest levels. With the sector trading at just a 5% premium to its 10-year average price-to-book multiple, and NPAs now at multi-year lows***, it offers an attractive entry point for investors to benefit from the banking sector’s likely resurgence.
The New Fund Offer for DSP Nifty Bank Index Fund will open for subscription on May 15th 2024, and will close on May 27th, 2024.
"A robust banking system is the key to economic growth and development, especially for a fast-growing country like India. At DSP, we endeavor to bring the right products at the right time for our investors. We recommend DSP Nifty Bank Index Fund to investors with longer time horizons, especially based on the long-term performance of the Nifty Bank Index," said Anil Ghelani, CFA, Head – Passive Investments & Products, DSP Mutual Fund.
“DSP is a serious player in the Passive Investments segment with a dedicated investment team as well as business team. We are gradually expanding our product range and with this launch we will have 22 products available for your investment allocation across all asset classes – Equity, Debt, Commodities, and the entire market with a wide range of products of index funds, ETFs and rules based smart beta products,” said Gurjeet Kalra, Business Head - Passive Funds, DSP Mutual Fund.
