SBI Mutual Fund launches new ETF: Should you invest?
What's the story
SBI Mutual Fund has launched a new Exchange Traded Fund (ETF), the SBI Nifty 1D Rate Liquid ETF - Growth. The open-ended fund replicates/tracks the Nifty 1D Rate Index and comes with relatively low-interest rate risk and credit risk. The New Fund Offer (NFO) is currently open for subscription until August 7. After allotment, the mutual fund shall be available for continuous sale and repurchase within five business days.
Investment approach
Investment strategy and asset allocation
The SBI Nifty 1D Rate Liquid ETF - Growth aims to generate returns that match the Nifty 1D Rate Index, before expenses. The scheme will invest between 95% and 100% of its assets in Tri-Party REPOs, Repo in Government Securities, Reverse Repos, and other similar overnight instruments approved by SEBI. Up to 5% of the fund's assets may be held in cash and cash equivalents.
Management details
Key details about the scheme
Jignesh Shah will manage the fund, which will be benchmarked against the Nifty 1D Rate Index. The maximum total expense ratio (TER) allowed under Regulation 52 (6) (b) is up to 1%. The scheme currently has no plans and only offers a growth option with no exit load. It will use a "passive" or indexing approach to achieve its investment objective.
Rebalancing strategy
When to invest in this fund?
The fund manager will try to rebalance the portfolio to match the index, but there may be a brief period when the portfolio's constituents differ from the scheme's asset allocation. In case of any deviation from this pattern, the AMC will rebalance within seven days. The fund is ideal for investors looking for short-term income solutions and investment in securities covered by Nifty 1D Rate Index.