From large constructions to items of daily use, metals are everywhere, and their consumption doesn’t seem to be even plateauing anytime soon. It is to tap the possibilities of this sector that ICICI Prudential has brought this New Fund Offering (NFO) in mutual funds.
The NFO will be open till August 12. An NFO offers an investor the opportunity to buy mutual fund units at the initial value of Rs 10.
Minimum application amount
The minimum application amount during the NFO is Rs. 1000 and multiples of Re 1.
The ETF’s will follow the Nifty Metal TRI as the benchmark. The fund managers are Nishit Patel Priya Sridhar.
The stocks in the index portfolio are Tata Steel, Hindalco Industries, Jindal Stainless, JSW Steel, SAIL, NMDC, Vedanta, Jindal Steel and Power, APL Apollo Tubes and Adani Enterprises.
This will be an exchange traded fund (ETF). The proceeds of the NFO will be invested in a number of companies that are in the business of ferrous as well as non-ferrous metals. Therefore, the range of subsectors within the metal domain will be diverse and dynamic.
The Nifty Metal Index consists of 15 companies. The index has been so composed that no company gets a weightage of more than 33%.
Valuation advantage
The AMC has said that metal stocks display a relatively low valuation compared to the broader market indices, and therefore, offer a better potential for investment.
Pointing out the advantages in the valuation front, ICICI Prudential said Nifty Metal Index Trailing price-to-book ratio is at 2.84 X compared to 4.47 X price-to-book ratio of Nifty 500 Index.
Transparent, cost efficient
ETFs offer diversification, transparency and periodic rebalancing in line with the index.
They are also cost efficient.
India’s position in the world
In metals, India holds a prominent position in the global scale. It is the world’s second largest crude steel producer, fourth largest iron ore producer and second largest aluminium producer.
“With increasing demand and consumption, especially in a rapidly growing economy like India, this sector presents a compelling long-term investment opportunity. Our Metal ETF aims to allow investors to benefit from the uptick in metals due to expected higher global inflation amidst lower interest rates,” said Principal – Investment Strategy at ICICI Prudential AMC, Chintan Haria.
The Nifty Metal Index includes companies from the metal sector, including both ferrous and non-ferrous metals. In the past 10 years, the Nifty Metal TRI has outperformed the Nifty 500 TRI five times. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
