Groww Nifty India Railways PSU Index Fund – Direct (G) : NFO Details

Groww has announced the launch of its Groww Nifty India Railways PSU Index Fund – Direct (G), an open-ended scheme designed to track the Nifty India Railways PSU Index - TRI. This fund aims to provide long-term capital appreciation by investing in equity and equity-related instruments of public sector undertakings in the Indian railways sector. The New Fund Offer (NFO) is set to open on January 16, 2025, and will close on January 30, 2025, with units priced at ₹10 each during this period. The scheme will re-open for continuous subscription on or before February 13, 2025. Investors should note that both the scheme and its benchmark are categorized under Very High Risk, and it is advisable to consult financial advisors for suitability.

Details of the NFO: Groww Nifty India Railways PSU Index Fund – Direct (G)

Investment Objective and Strategy

Objective:

The investment objective of the Groww Nifty India Railways PSU Index Fund – Direct (G) is to generate long term capital growth by investing in securities of the Nifty India Railways PSU Index in the same proportion / weightage with an aim to provide returns before expenses that track the total return of Nifty India Railways PSU Index, subject to tracking errors.

However, there can be no assurance or guarantee that the investment objective of the scheme will be achieved.

Investment Strategy:

The Groww Nifty India Railways PSU Index Fund – Direct (G) will be managed passively with investments in stocks in a proportion to the weights of these stocks in the NSE India Infrastructure - TRI. The investment strategy would revolve around reducing the tracking error to the least possible through rebalancing of the portfolio, considering the change in weights of stocks in the index as well as the incremental collections/redemptions from the Scheme. The designated Fund manager of the scheme will be responsible for taking the day-to-day investment decisions and will inter-alia be responsible for asset allocation, security selection and timing of investment decisions.

The Groww Nifty India Railways PSU Index Fund – Direct (G) shall be benchmarked to NSE India Infrastructure - TRI. Since the scheme is an index fund, the compositions of the benchmark are such that it is most suited for comparing performance of the Scheme. A small portion of the net assets will be held as cash or will be invested in debt and money market instruments permitted by SEBI/RBI including TREPS or in alternative investment for the TREPS as may be provided by the RBI, to meet the liquidity requirements under the Scheme.

The AMC may approach rating agencies such as CRISIL, ICRA, etc for ratings of the scheme. The Scheme may invest in other Scheme managed by the AMC or in the Schemes of any other Mutual Funds, provided it is in conformity to the
investment objectives of the Scheme and in terms of the prevailing Regulations. As per the Regulations, no investment management fees will be charged for such investments and the aggregate inter-Scheme investment made by all Schemes of Groww Mutual Fund or in the Schemes under the management of other asset management companies shall not exceed 5% of the net asset value of the Groww Mutual Fund. The limit however does not apply to any Fund of Funds scheme.

For the present, the Scheme does not intend to enter into underwriting obligations. However, if the Scheme does enter into an underwriting agreement, it would do so after complying with the Regulations. Derivative products are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor. Execution of such strategies depends upon the ability of the fund manager to identify such opportunities. Identification and execution of the strategies to be pursued by the fund manager involve uncertainty and decision of fund manager may not always be profitable. No assurance can be given that the fund manager will be able to identify or execute such strategies”

Risks Associated Groww Nifty India Railways PSU Index Fund – Direct (G):

1. High-Risk Benchmark: The fund tracks the Nifty India Railways PSU Index, which is categorized under Very High Risk.
2. Sector Concentration: Being sectoral, it is exposed to risks specific to the railways sector.
3. Market Volatility: Investments are subject to market risks, including equity market volatility.
4. Tracking Error: Returns may deviate from the benchmark due to tracking errors.
5. Liquidity Risks: A portion of assets in debt and money market instruments could affect liquidity.
6. No Guaranteed Returns: There is no assurance of meeting the investment objective.
7. Derivative Risks: Potential losses due to leveraged instruments if used.
8. Regulatory Risks: Subject to SEBI/RBI regulations, changes could impact performance.
9. Management Risks: Dependence on the fund manager’s ability to minimize tracking error and rebalance the portfolio.
10. Interest Rate Risks: Exposure to debt instruments could be impacted by interest rate fluctuations.

What Type of Investor Should Invest in the Groww Nifty India Railways PSU Index Fund – Direct (G)?

1. Risk-Tolerant Investors: Suitable for those comfortable with very high-risk investments.
2. Long-Term Horizon: Ideal for investors seeking long-term capital appreciation.
3. Sector Enthusiasts: Those interested in the Indian railways sector and public sector undertakings.
4. Diversification Seekers: Investors looking to diversify their portfolio with sector-specific funds.
5. Index Fund Preferers: Suitable for those who prefer passive investment strategies.
6. Financially Informed: Investors who understand market risks and regulatory changes.
7. Experienced Investors: Those familiar with tracking error and market volatility.
8. Growth-Oriented: Individuals aiming for capital growth over a long period.
9. Liquidity Needers: Investors willing to accept some level of liquidity risk.
10. Advised Investors: Those who have consulted financial advisors to ensure suitability.