Axis Mutual Fund has launched the Axis Nifty IT Index Fund, an open-ended index fund designed to track the NIFTY IT TRI. The fund's objective is to offer returns that align with the total returns of the NIFTY IT TRI, with consideration for tracking errors.
The NIFTY IT TRI represents the performance of IT companies operating globally. The index comprises ten companies listed on the National Stock Exchange (NSE), with Infosys, Tata Consultancy Services, Wipro, Tech Mahindra, and HCL Technologies holding the highest weightage.
NFO Details
The New Fund Offer (NFO) subscription period for the Axis Nifty IT Index Fund is from June 27, 2023, to July 11, 2023, with the scheme reopening within five business days from the date of allotment. The minimum investment amount is Rs. 5,000, with increments of Re. one thereafter.
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Index Funds
Index funds replicate the composition of a specific stock market index within their portfolio, ensuring a performance closely aligned with the tracked index. By investing in sector-based index funds, investors can capitalise on growth opportunities within specific sectors.
Why the IT Sector?
Axis MF says that its IT Index Fund is poised to grow due to the growing IT landscape where firms of all sizes are adopting new technologies such as cloud computing, machine learning and artificial intelligence (AI).
B. Gopkumar, MD & CEO of Axis AMC, says India has been at the forefront of driving technological change across sectors, especially in the last three years. Due to ongoing technological innovations, he anticipates that all companies will operate in the digital arena.
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India's IT-Business Process Management (BPM) exports have consistently outperformed global IT services growth. It is India's largest single-service exporter industry, generating annual exports of over USD 194 billion. According to NASSCOM, the industry is projected to reach USD 245 billion in 2023.
Axis NIFTY IT Index Fund
Due to challenges faced in 2022, IT companies were trading at discounted prices compared to their average multiples over the past 3-5 years, Axis MF says. This trend, coupled with a strong earnings season in Q1 FY24, suggests revenue recovery in the second half of FY24. Axis MF says it launched the fund to capitalise on this opportunity.
The Axis Nifty IT Index Fund will invest between 95 per cent and 100 per cent of funds in securities covered by Nifty IT TRI, with the remaining funds in debt and money market investments. Due to its benchmark tracking approach as a passive fund, it offers lower management costs. The fund is suitable for investors seeking exposure to leading IT companies and aiming for long-term capital appreciation.
Investors should note that the scheme involves 'Very High Risk' as per the Scheme Information Document since it primarily invests in equity instruments. An exit load of 0.25 per cent applies if redeemed or switched out within seven days from the date of allotment, and no exit load applies after seven days.
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