Tata Mutual Fund, a leading player in the Indian asset management industry, has unveiled an exciting opportunity for investors seeking exposure to high-growth sectors. The fund house recently launched six new thematic index funds (NFOs), allowing investors to participate in the potential of specific industries with a single investment.

The six newly-launched index funds are Tata Nifty 500 Multicap 50:30:20 Infrastructure Index Fund, Tata Nifty MidSmall Healthcare Index Fund, Tata Nifty Realty Index Fund, Tata Nifty Financial Services Index Fund, Tata Nifty Auto Index Fund and Tata Nifty 500 Multicap India Manufacturing 50:30:20 Index Fund. Tata Asset Management says these six themes are where affluent investors are investing these days.

These NFOs have been launched on April 08, 2024, with a minimum subscription amount of Rs 5,000 and in multiples of Re.1/- thereafter.It caters to investors seeking exposure to various growth sectors of the Indian economy. NFOs will close on April 22, 2024 the schemes will reopen for continuous sale and repurchase on April 30, 2024. This article delves into the details of these NFOs, explores the targeted sectors, and analyses the potential benefits for investors.

[Read: Top 5 Mutual Funds with High Allocation to Tata Stocks]

Commenting on the launch of these index funds, Mr Anand Vardarajan, Business Head at Tata Asset Management, said, “There is a saying ‘skate to where the puck is going, not where it has been’. It is instructive for an investor to then see where money is being spent today. More often than not, where the rich spend today, the middle class may spend tomorrow. In that context we have come up with 6 index funds which could participate in the overall India growth story.”

He further added, that “The decision to introduce these index funds is backed by rising income levels and compelling consumer trends.Rising auto demand with sustainability and green energy are powering the growth of this sector. Factories are operating at near-maximum capacity, indicating near-peak production capacity and spurring manufacturing growth. The healthcare industry presents potential opportunities driven by strong margins, stabilised pricing pressures in international markets, and increasing health awareness.”

Tata Mutual Fund’s NFOs target six key sectors with promising growth prospects in the Indian economy:

1. Tata Nifty Auto Index Fund

Tata Nifty Auto Index Fund is an open-ended scheme replicating/tracking the Nifty Auto Index (TRI). The investment objective of the scheme is to provide returns, before expenses, that are in line with the performance of the Nifty Auto Index (TRI), subject to tracking error.

This scheme focuses on businesses that manufacture and sell autos, including electric vehicles (EVs), four-wheelers, and two-wheelers. This is an attractive industry to invest in due to rising disposable incomes, the developing EV market, and the growing demand for personal mobility.

[Read: Automobile Sector: Gear up Your Investment Portfolio with These Top 5 Mutual Funds]

Under normal circumstances, Tata Nifty Auto Index Fund will hold an allocation of 95% to 100% in securities covered by the Nifty Auto Index and 0% to 5% in Debt & Money Market Instruments, including units of Mutual Funds.

Benchmark: Tata Nifty Auto Index Fund’s performance will be benchmarked against NIFTY Auto Index (TRI)

Plans & Options: The scheme offers Regular and Direct plans. Each plan offers a Growth option and Income Distribution cum Capital Withdrawal option (IDCW).

Fund Managers: The scheme will be managed by Mr Kapil Menon

2. Tata Nifty MidSmall Healthcare Index Fund

Tata Nifty Auto Index Fund is an open-ended scheme replicating/tracking Nifty MidSmall Healthcare Index (TRI). The scheme’s investment objective is to provide returns, before expenses, that align with the performance of the Nifty MidSmall Healthcare Index (TRI), subject to tracking error.

The scheme leverages the positive aspects of the healthcare sector, including robust margins, consistent pricing pressures in global marketplaces, and growing consumer health consciousness. It is modelled after the Nifty MidSmall Healthcare Index.

Under normal circumstances, Tata Nifty MidSmall Healthcare Index Fund will hold an allocation of 95% to 100% in securities covered by the underlying Index and 0% to 5% in Debt & Money Market Instruments, including units of Mutual Funds.

Benchmark: Tata Nifty MidSmall Healthcare Index Fund’s performance will be benchmarked against Nifty MidSmall Healthcare Index (TRI)

Plans & Options: The scheme offers Regular Plan and Direct Plan; each plan offers a Growth option and Income Distribution cum Capital Withdrawal option (IDCW).

Fund Managers: The scheme will be managed by Mr Kapil Menon

[Read: Mutual Funds Are Betting Big on These Sectors: Are You Missing Out?]

3. Tata Nifty Financial Services Index Fund

Tata Nifty Financial Services Index Fund is an open-ended scheme replicating/tracking Nifty Financial Services Index (TRI). It provides exposure to a diverse range of financial services companies poised for growth. The investment objective of the scheme is to provide returns, before expenses, that are in line with the performance of the Nifty Financial Services Index (TRI), subject to tracking error.

As demonstrated by its strong performance measures and excellent asset quality, the Indian banking sector is currently seeing extraordinary expansion. The industry has excellent asset quality with a low Gross Non-Performing Asset (GNPA) rate of 2.9%.

Notably, the industry had a respectable 14% increase in deposits and a 21% increase in loans. Furthermore, the volume of Unified Payments Interface (UPI) transactions has increased by a noteworthy 57% year over year (y-o-y), indicating the growing acceptance of digital banking services.

Under normal circumstances, Tata Nifty Financial Services Index Fund will hold an allocation of 95% to 100% in securities covered by the underlying index and 0% to 5% in Debt & Money Market Instruments, including units of Mutual Funds.

Benchmark: Tata Nifty Financial Services Index Fund’s performance will be benchmarked against Nifty Financial Services Index (TRI).

Plans & Options: The scheme offers Regular Plan and Direct Plan each plan offers a Growth option and an Income Distribution cum Capital Withdrawal option (IDCW).

Fund mManagers: The scheme will be managed by Mr Kapil Menon

4. Tata Nifty Realty Index Fund

Tata Nifty Realty Index Fund is an open-ended scheme replicating/tracking Nifty Realty Index (TRI). It invests in companies within the real estate sector, including developers, builders, and real estate investment trusts (REITs). Rising demand for housing, coupled with government reforms, makes this a promising avenue for long-term investors.

The investment objective of the scheme is to provide returns, before expenses, that are in line with the performance of the Nifty Realty Index (TRI), subject to tracking error. The fund endeavours to potentially benefit from factors such as soaring residential demand, rapid sales velocity, and a resilient balance sheet post-RERA implementation.

[Read: Unlock the Potential of Real Estate With These Top 5 Infrastructure Mutual Funds]

Under normal circumstances, Tata Nifty Realty Index Fund will hold an allocation of 95% to 100% in securities covered by the underlying Nifty Realty Index and 0% to 5% in Debt & Money Market Instruments, including units of Mutual Funds.

Benchmark: Tata Nifty Realty Index Fund’s performance will be benchmarked against Nifty Realty Index (TRI).

Plans & Options: The scheme offers Regular Plan and Direct Plan each plan offers Growth option and an Income Distribution cum Capital Withdrawal option (IDCW).

Fund Managers: The scheme will be managed by Mr Kapil Menon

5. Tata Nifty500 Multicap India Manufacturing 50:30:20 Index Fund

Tata Nifty Nifty500 Multicap India Manufacturing 50:30:20 Index Fund is an open-ended scheme replicating/tracking Nifty500 Multicap India Manufacturing 50:30:20 (TRI). The investment objective of the scheme is to provide returns, before expenses, that are in line with the performance of the underlying index, subject to tracking error.

It offers exposure to companies across large, mid, and small-cap segments within the manufacturing sector. The ‘Make in India’ initiative and focus on self-reliance are expected to drive growth in this sector.

Given India’s notable advancements, including a higher ranking in the World Bank’s Ease of Doing Business index as a result of initiatives like the introduction of the Goods and Services Tax (GST), performance-linked investment schemes, the RERA policy, and digitalization, the country’s manufacturing sector presents attractive investment opportunities.

Furthermore, the fund’s focus on top-performing stocks from various sectors within the manufacturing theme is consistent with India’s path to becoming a manufacturing powerhouse.

[Read: Top 5 Mutual Funds That Are Betting on the Manufacturing Boom]

Under normal circumstances, Tata Nifty500 Multicap India Manufacturing 50:30:20 Index Fund will hold an allocation of 95% to 100% in securities covered by the underlying Index and 0% to 5% in Debt & Money Market Instruments including units of Mutual Funds.

Benchmark: Tata Nifty500 Multicap India Manufacturing 50:30:20 Index Fund’s performance will be benchmarked against Nifty500 Multicap India Manufacturing 50:30:20 Index (TRI).

Plans & Options: The scheme offers Regular Plan and Direct Plan each plan offers Growth option and an Income Distribution cum Capital Withdrawal option (IDCW).

Fund Managers: The scheme will be managed by Mr Kapil Menon

6. Tata Nifty500 Multicap India Infrastructure 50:30:20 Index Fund

Tata Nifty Nifty500 Multicap India Infrastructure 50:30:20 Index Fund is an open-ended scheme replicating/tracking Nifty500 Multicap India Infrastructure 50:30:20 (TRI). The investment objective of the scheme is to provide returns, before expenses, that are in line with the performance of the underlying Index, subject to tracking error.

The fund offers exposure to companies across large, mid, and small-cap segments within the infrastructure space. This sector is expected to benefit from government spending on development projects, urbanisation, and smart city initiatives.

With public capital expenditure in infrastructure increasing significantly and factories operating at peak levels, this fund presents an attractive investment opportunity for those seeking exposure to India’s burgeoning infrastructure sector.

Under normal circumstances, Tata Nifty500 Multicap India Infrastructure 50:30:20 Index Fund will hold an allocation of 95% to 100% in securities covered by the underlying Index and 0% to 5% in Debt & Money Market Instruments including units of Mutual Funds.

Benchmark: Tata Nifty500 Multicap India Infrastructure 50:30:20 Index Fund’s performance will be benchmarked against Nifty500 Multicap India Infrastructure 50:30:20 Index (TRI)

Plans & Options: The scheme offers Regular Plan and Direct Plan each plan offers Growth option and an Income Distribution cum Capital Withdrawal option (IDCW).

Fund Managers: The scheme will be managed by Mr Kapil Menon

Tata Mutual Fund’s launch of six thematic index funds presents a compelling opportunity for investors seeking exposure to promising sectors in the Indian economy. These new NFOs provide a cost-effective and diversified way to participate in the growth potential of healthcare, infrastructure, real estate, financial services, automobile, and manufacturing sectors.

However, by carefully considering the factors mentioned above, you can assess whether Sectoral/Thematic funds align with your investment goals and risk tolerance. Remember, these funds offer targeted exposure but also come with inherent risks. Conducting thorough research, understanding the chosen sector, and maintaining a well-diversified portfolio is key to successful investing in thematic funds.

This article first appeared on PersonalFN here