Money Today and Plexus Management evaluate new funds for you. This time it's the Reliance Banking Exchange Traded Fund.
FUND FACTS
Scheme type: Open-ended exchange traded fund
Minimum investment: Rs 5,000; unit price: Rs 10
Entry load: 2.25%
Investor grievances: Balkrishna Kini. Tel: (022) 30414800.
FUND STATS
Objective: Closely correspond to the total returns of securities as represented by the CNX Bank Index. However, the performance of scheme may differ from that of the underlying index due to tracking error.
Benchmark: CNX Bank Index
Fund manager: Krishan Daga
Asset allocation:
90-100%: Securities covered by CNX Bank index
0-10%: Debt and cash
Comparable existing scheme: As the fund will track the CNX Bank Index, which has 12 liquid and large Indian banking stocks, close comparisons can be drawn with Benchmark BEES, PSU bank BEES and Kotak Bank ETF.
FUND PROGNOSIS
Idea distiller: Banking (and entire financial services sector) is currently attractive. Defensive approach, low valuations and strong linkages with the economy are the reasons why schemes are being launched to track this sector. Reliance’s launch of the fund indicates that it is equally upbeat towards the sector.
Fund house report: The largest AMC in the country manages funds worth Rs 96,386 crore across 110 schemes with top performers in each category.
Scheme DNA: Four fundamentals of the fund scheme
Unique idea: Medium
Return possibility: Medium
Risk: Low
Operability/complexity: High
INVESTOR TAKEAWAYS
Who should apply: If you have already booked profit in the market and are keen to cautiously get back into the market, this may be your re-entry vehicle. The ETF advantage aside, the fund tracks the banking sector which is currently very attractive.
Remember: The strategy of the fund is passive and the banking sector is undervalued. But this scheme is still a sector fund, which are generally riskier than equity diversified schemes. The fund comes from the Reliance house which is known for spotting opportunities. However, pure banking is a business where sustained bull runs are a rarity, so stay open to opportunities to cash out.
