Axis Mutual Fund today launched the Axis Bank Index Fund, which is open for subscription in the New Fund Offer (NFO) till tomorrow May 17, 2024. This passively managed fund will mirror the Nifty Bank Total Return Index (TRI) in terms of investment. During the NFO the minimum application amount is Rs. 500 and in multiples of Re. 1 thereafter. If investments are redeemed or switched out within 7 days from the date of allotment, an exit load of 0.25 per cent is applicable after which the exit load is nil.
The index funds are passively managed, tracking the performance of their respective indices. This style provides investors with exposure to an entire basket of stocks, rather than selecting individual companies. The transparency in-stock selection and lower cost when compared to active funds are benefits of choosing an index fund. Index funds usually allocate 90 to 95 per cent of their portfolio in stocks constituting the tracking index and also in the same ratio as per the index to the extent possible. Axis Bank Index Fund will invest the rest in debt and money market instruments, to meet liquidity and expense requirements.
Axis Bank Index Fund tracks the Nifty Bank Total Return Index which comprises the largest and most of them are very liquid banking stocks in India, a release from the fund house said. It includes a diversified mix of Large-Cap and Mid-Cap banking companies (PSUs as well as Private Banks) thus beneficial for stock diversification. Additionally, the index is rebalanced semi-annually to reflect the sector's current performance by including companies that best represent it.
Against the backdrop of India's rapid economic rise, the country's banking sector continues to exhibit growth and resilience, B. Gopkumar, MD & CEO, Axis AMC said.
"Fuelled by robust regulatory frameworks and the rapid adoption of digital banking, the banking sector is well-positioned for sustained expansion...The sector benefits from a strong emphasis on innovation and adherence to the highest governance standards, thereby capitalizing on the transformative trends reshaping India's banking landscape," Gopakumar added.
Ashish Gupta, Chief Investment Officer at Axis AMC said the banking sector offers potential for good returns in the backdrop of increasing financial inclusion and a shift towards more sophisticated banking services.
Many index funds are tracking the NIFTY Bank Total Return Index that have given a 15.08 per cent return in one year, a 15.40 per cent return in three years and an 11.19 per cent return in five years.
