Groww Mutual Fund announces power sector-focused ETFs: Should you invest?
What's the story
Groww Mutual Fund has announced two new passive investment schemes, the BSE Power ETF and the BSE Power ETF Fund of Fund (FoF). Both these funds shall track the BSE Power Index - Total Return Index (TRI). The New Fund Offer (NFO) for both the schemes will open on July 18 and shall close on August 1. So, should you invest? Let's have a look.
Fund details
Direct investment v/s mutual fund option
The Groww BSE Power ETF is an exchange-traded fund that directly invests in the underlying companies of the BSE Power Index. On the other hand, the Groww BSE Power ETF FoF invests in this ETF, giving investors a mutual fund option. The BSE Power Index consists of 14 firms across power generation, transmission, integrated utilities, and power equipment sectors.
Sector expansion
India's electricity consumption has grown 5x since 2000
Groww Mutual Fund has noted that India's electricity consumption has surged nearly five times since 2000. Despite this growth, per capita consumption is low compared to global averages, indicating potential for further expansion. The country has transitioned from power deficits to surpluses with peak shortages declining from 4.2% in FY14 to just 0.1% in FY25.
Growth drivers
Push for renewable energy, infrastructure to drive growth
The Indian government's push for renewable energy, new transmission infrastructure, and schemes such as the National Electricity Plan are expected to drive further growth in the sector. Also, demand from electric vehicles and data centers is on the rise. Groww Mutual Fund said these schemes seek to capitalize on this long-term opportunity through index-based investing with low costs and efficient rebalancing.
Schemes
Specifics of the new schemes
The minimum investment for these schemes is ₹500 with no exit load. They will use Groww's 10SPEARTech technology to keep the tracking error low. The funds are managed by Nikhil Satam, Aakash Chauhan, and Shashi Kumar. Through these new schemes, Groww Mutual Fund hopes to provide investors an opportunity to invest in India's growing power sector through a diversified portfolio of companies within the BSE Power Index.