01-01-1970 12:00 AM | Source: PR Agency
ICICI Prudential Mutual Fund Launches India`s First Auto Index Fund - ICICI Prudential Nifty Auto Index Fund
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Highlights:

• The Index is designed to reflect the behaviour and performance of the Automobiles segment in the listed universe

• Provides exposure to blue chip auto and auto ancillary names which are part of the benchmark indices

• Demand momentum for autos likely to sustain on account of the strong recovery in macro activities and rising individual income

• Nifty Auto Index has grown at 14.21% annually since August 2012

ICICI Prudential Mutual Fund launches India’s first Auto Index Fund namely ICICI Prudential Nifty Auto Index Fund. The offering is an open-ended index scheme replicating Nifty Auto Index..

Speaking on the launch of the product, Mr. Chintan Haria, Head – Product Development & Strategy, ICICI Prudential Mutual Fund said, “In terms of volume, by 2030, India is expected to be the world's third-largest automotive market. We believe through ICICI Prudential Auto Index Fund; investors will be able to tap into the evolving space of the Indian automobile industry. With India being an emerging global hub for auto component sourcing coupled with the Government support for electric mobility, we believe this space is likely to be under the spotlight.”

From an industry perspective, auto is cyclical in nature. The profits of the companies that operate in this space rise or fall in line with consumer confidence. However, this is one industry that boasts of a much higher return on capital employed (RoCE) and cash generation compared with other sectors, attributable to good margins and higher asset turnover. As per capita income grows, penetration is likely to increase as affordability and income levels will rise leading to increased discretionary spending thereby supporting the sector. Furthermore, in Union Budget 2021-22, the government introduced the voluntary vehicle scrap page policy, which is likely to boost demand for new vehicles after removing old unfit vehicles currently plying on the Indian roads. Availability of skilled labour at low cost, robust research and development centres, coupled with low-cost steel production provides great opportunities for investment.

About the Index

The Nifty Auto Index is designed to reflect the behavior and performance of the automobile segment of the financial market. The universe for the offering is Nifty 500. No single stock shall be more than 33% and weights of top 3 stocks cumulatively shall not be more than 62% at the time of rebalancing. The index is rebalanced semi-annually in March and September respectively

 

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