The Indian automobile industry delivered a solid performance in FY24, recording a 12.5% growth with total sales reaching 2,38,53,463 units compared to 2,12,04,846 units in FY23, as per data from the Society of Indian Automobile Manufacturers (SIAM). With the automobile sector on a growth trajectory, the Nippon India Nifty Auto Index Fund presents a compelling investment opportunity. The passenger vehicle (PV) segment saw an 8% growth, driven largely by utility vehicles (UV), which recorded a remarkable 26% increase in sales.
Similarly, the two-wheeler segment grew by over 13%, while three-wheelers saw an impressive 41.5% growth. However, the commercial vehicle segment remained flat, with marginal growth of 0.6%. If you’re looking to invest in India’s growing automobile sector, Nippon India Nifty Auto Index Fund could be a smart choice, leveraging the sector’s steady expansion and growth potential.
Details of Nippon India Nifty Auto Index Fund NFO
The Nippon India Nifty Auto Index Fund NFO is designed to closely track the Nifty Auto Index, providing investors with returns aligned with the performance of this index. This fund invests primarily in equity securities within the auto sector, reflecting the index’s composition while considering tracking errors.
Investment Objective
Nippon India Nifty Auto Index Fund NFO aims to generate returns commensurate with the total returns of securities in the Nifty Auto Index, subject to tracking errors. This objective allows investors to participate in the growth of India’s auto sector through a diversified portfolio of top auto companies, although no returns are guaranteed.
Key Details of Nippon India Nifty Auto Index Fund
| Attributes | Details |
| Fund House/Asset Management Company | Nippon India Mutual Fund |
| Risk Profile | Very High |
| Fund Managers | Mr. Himanshu Mange |
| Category | Index Fund |
| NFO Opens | November 14, 2024 |
| NFO Closes | November 28, 2024 |
| Benchmark Index | Nifty Auto TRI |
| Exit Load | NIL |
| Minimum Application Amount | ₹1,000 |
Asset Allocation Strategy
The Nippon India Nifty Auto Index Fund’s portfolio will mirror the Nifty Auto Index’s composition. Under normal market conditions, the fund will allocate its assets as follows:
| Instruments | Minimum | Maximum |
| Securities constituting Nifty Auto Index | 95% | 100% |
| Cash & Cash Equivalents, Money Market Instruments | 0% | 5% |
This allocation helps the fund maintain a high correlation with the auto index, offering exposure to companies within the automotive and related industries.
Understanding Risks and Returns
As an index fund focused on the auto sector, this scheme carries a high-risk profile. The fund is suited for long-term investors who are comfortable with sectoral volatility. While the auto sector is expected to benefit from technological advances, consumer demand, and potential regulatory changes, these same factors could lead to fluctuations in returns.
The benchmark, Nifty Auto TRI, has delivered returns of 41.05% 26.19% 24.13% over the last 1 year, 3 years, and 5 years respectively.Investors should be aware of potential tracking errors, as fund performance might slightly differ from the index due to expenses or unforeseen market conditions.
Nippon India Mutual Fund
Nippon India Mutual Fund (NIMF), formerly known as Reliance Mutual Fund, was established in June 1995 through a partnership between Reliance Capital and Japan’s Nippon Life Insurance. In October 2019, Nippon Life acquired Reliance’s share, leading to the rebranding of the fund as Nippon India Mutual Fund. A key moment for NIMF came in 2017 when it became India’s first asset management company (AMC) to list on the stock exchanges.
NIMF’s operations are managed by Nippon Life India Asset Management Limited (NAM India), with majority ownership shared by Nippon Life Insurance and Reliance Capital, together holding a 75.93% stake. As of June 30, 2024, Nippon India Mutual Fund manages assets totaling ₹516,267.80 crore, covering Mutual Funds, alternative investments, pension funds, and offshore funds.
Meet the Fund Manager
The fund is led by Himanshu Mange, a Chartered Accountant with over four years in investment management. Since December 2023, he has been the Fund Manager & Dealer – ETF at NAM India, managing funds such as the Nippon India Index Fund – Nifty 50 Plan and Nippon India Index Fund – BSE Sensex Plan. His background includes roles as Dealer – ETF and Assistant Manager at Tata AIA Life Insurance, specializing in investment operations and finance. His deep experience with ETFs and index funds highlights his expertise in market trends and investment strategies.
Who Should Invest in Nippon India Nifty Auto Index Fund?
The Nippon India Nifty Auto Index Fund NFO is ideal for:
- Investors looking for long-term capital growth by participating in the auto sector.
- Individuals who prefer index-based investing with minimal tracking errors.
- Investors with a high-risk tolerance and a focus on a sector known for its cyclicality and sensitivity to market changes.
Nippon India Nifty Auto Index Fund may suit investors who believe in the future potential of India’s auto industry, driven by technological advancements, rising demand, and evolving consumer preferences.
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