DSP Mutual Fund announced the launch of three open-ended exchange traded funds (ETFs) DSP S&P BSE Sensex ETF, DSP Nifty Private Bank ETF and DSP Nifty PSU Bank ETF.
DSP S&P BSE Sensex ETF replicates/tracks the S&P BSE Sensex Index and offers investors the opportunity to invest in the Indian markets - one of the fastest growing economies with conducive economic and capex conditions. DSP Nifty Private Bank ETF replicates/tracks the Nifty Private Bank Index, offering investors a long-term structural growth story in Indian Private Sector Banks. DSP Nifty PSU Bank ETF replicates/tracks the Nifty PSU Bank Index and offers investors a tactical bet on a revival in PSU Banks.
The S&P BSE Sensex Index closely tracks earnings over the long term and the index captures the sector trends and rotations to represent the current economy. The index is also diversified across sectors and has a large-cap orientation. The index also has a long history with past data showing that as the holding period increases, the possibility of negative returns decreases, and the probability of comparatively higher returns increases.
Private Banks in India have been a structural growth story and the market share of private sector banks has doubled in the last 18 years. The balance sheets of private sector banks have also become stronger and they have been well capitalized to support continued deposit and credit growth. Private banks' financial ratios have also been rising sharply since the past three years while their valuations are at an attractive level compared to their historic average. Credit and deposit growth for private banks have also been growing at a strong rate while net non-performing assets (NPAs) are an 8 year low.
For PSU banks, their revival story may have just started with PSU banks outperforming private banks for the last three years. PSU banks have also seen an improvement in their net interest margins from falling NPA and higher recoveries. PSU Bank mergers have also strengthened their balance sheet and credit growth. The current valuations of PSU banks are also below its historical average. Given its increasing return on assets, the sector looks poised for a re-rating.
The New Fund Offer for DSP S&P BSE Sensex ETF, DSP Nifty Private Bank ETF and DSP Nifty PSU Bank ETF opens for subscription on July 17th 2023 and closes on July 21st 2023.
"The India growth story has given rise to many opportunities for investors for a successful long-term investing experience. Our offerings in the ETF space give investors the choice to do so by tracking the broader market passively at a relatively lower cost to achieve their financial goals, ride the strong structural growth story of private sector banks or benefit from a likely re-rating of PSU banks depending on their financial plan and risk tolerance." says Anil Ghelani, CFA, Head - Passive Investments & Products, DSP Mutual Fund.