DSP Mutual Fund has introduced the Nifty Private Bank Index Fund, an open-ended scheme that tracks the Nifty Private Bank Index.
This fund allows investors to benefit from the growth of the private banking sector.
The New Fund Offer (NFO) opened for investment on February 14 and will close on February 28.
You can also invest through SIP.
Investors can participate in this NFO through a lump sum or SIP. The fund will invest in shares of the four largest private banks, which hold around 80% weightage in the Nifty Bank Index.
These banks enjoy strong customer trust and face no issues in raising capital. Being large-sized banks, they can achieve growth without difficulty.
Over the past two decades, private banks have played a key role in driving India’s banking sector growth.
A Good Opportunity to Invest in the Banking Sector
The Nifty Private Bank Index has been underperforming for some time, with its current valuation lower than the 10-year average.
However, these banks are expected to perform better in the future, making this a favorable time to invest in banking stocks.
Investors looking to invest in private banks can consider this new fund offer but should consult their financial advisor first.
Customer Trust in Big Banks
Anil Ghelani, Head of Passive Investments & Products at DSP Mutual Fund, stated that the dominance of big banks in the Nifty Private Bank Index could benefit investors.
Large banks usually perform well due to strong customer trust. This fund provides an opportunity to benefit from the growth of India’s private banking sector.
Should You Invest?
Deepesh Shah, Fund Manager at DSP Mutual Fund, stated that the DSP Nifty Private Bank Index Fund offers a tax-efficient way to benefit from the private banking sector.
Unlike direct stock investments, mutual funds do not require investors to pay capital gains tax on rebalancing or dividends.
Since many stocks in the Nifty Private Bank Index are currently trading below their historical averages, this could be a good time to invest.
Experts suggest that instead of investing in an NFO, it may be better to choose existing funds already available in the market.
Many funds focusing on the banking sector have an established track record that investors can review.
However, since this fund invests only in shares of large private banks, the risk involved is relatively lower.
