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Nippon MF, ICICI Prudential MF race to launch India’s first Auto ETF

Nippon MF, ICICI Prudential MF race to launch India’s first Auto ETF

Schemes of both fund houses to open on January 5; will mirror Nifty Auto Index to provide exposure to top companies representing auto and auto ancillaries.

Nippon MF, ICICI Prudential MF race to launch India’s first Auto ETF Nippon MF, ICICI Prudential MF race to launch India’s first Auto ETF

Two of the country’s largest mutual fund houses are vying with each other to launch the country’s first exchange traded fund (ETF) based on the auto and auto ancillary sectors. 

On Monday, both Nippon Mutual Fund and ICICI Prudential Mutual Fund announced launching their respective Nifty Auto ETFs that will mirror the Nifty Auto Index, which comprises of all the automobile majors of the country along with those from the auto ancillary segment. 

Companies like Maruti Suzuki India, Tata Motors, M&M, Bajaj Auto, Eicher Motors, Hero MotoCorp and Bharat Forge have the highest weightage in the auto index. 

Incidentally, statements issued by both the fund houses claimed that theirs was the country’s first Auto ETF. 

"Nippon India Mutual Fund announces the launch of Nippon India Nifty Auto ETF, India’s First Auto sector ETF. The Auto ETF is an open-ended scheme replicating/ tracking the Nifty Auto Index,” stated a release from Nippon Mutual Fund. 

Similarly, a statement from ICICI Prudential MF stated: “ICICI Prudential Mutual Fund has launched India’s first Auto ETF namely ICICI Prudential Nifty Auto ETF. The offering aims to provide returns that closely correspond to the total return of the benchmark Nifty Auto Index subject to tracking errors.” 

Interestingly, it is difficult to ascertain which one would be the first as the both the new fund offers (NFOs) will open on January 5. While the ICICI Prudential fund will close on January 10, the one by Nippon MF will be open till January 14. 

Apart from the NFO close date, there is not much to differentiate as both the schemes have the same benchmark and are ETFs so the portfolio will basically replicate the index. Further, the minimum investment amount is also pegged at Rs 1,000 for both the schemes. The ICICI Prudential scheme, however, is expected to list first on the bourses as its NFO will close before the one by Nippon MF.

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