SBI Nifty India Consumption Index Fund - Direct (G): NFO Details

SBI Nifty India Consumption Index Fund - Direct (G) is an open-ended index fund designed to track the performance of the Nifty India Consumption Index. This index focuses on companies that play a critical role in India’s growing consumption story, which includes sectors such as FMCG, automobiles, healthcare, consumer goods, and retail. As India’s economy grows and more people enter the middle class, there’s an increasing demand for these essential goods and services. This fund is ideal for investors who wish to benefit from this long-term growth in consumption while keeping costs low through passive management.

Details of the NFO: SBI Nifty India Consumption Index Fund - Direct (G)

Source: Scheme Information Document, Key Information Memorandum

Investment Objective and Strategy

Objective:

The SBI Nifty India Consumption Index Fund - Direct (G) aims to generate returns that correspond to the performance of the Nifty India Consumption Index, subject to tracking error. The index is composed of companies that benefit from India’s increasing consumption demands, which include sectors like FMCG, automobiles, healthcare, and consumer goods. The fund aims to mirror the growth of these companies as they contribute to the broader economy. However, there is no guarantee that the fund will achieve its stated objective.

Investment Strategy:

The investment strategy for the SBI Nifty India Consumption Index Fund - Direct (G) is based on passive management. Instead of actively picking stocks, the fund is designed to replicate the performance of the Nifty India

Consumption Index. Key components of this strategy include:

• Index-Based Investment: The fund closely tracks the Nifty India Consumption Index by investing in the same companies and sectors that are part of the index. This index covers a range of industries, including FMCG, automobiles, healthcare, and retail, all of which are crucial to India’s growing consumer economy.
• Diversification Across Sectors: The fund aims to provide investors with a broad exposure to consumption-driven sectors in India. This includes companies involved in the production and distribution of consumer goods, retail services, and healthcare products. The index is designed to reduce concentration risk by spreading investments across different sub-sectors, ensuring that investors are not overly reliant on a single industry or stock.
• Passive Management: As an index fund, this product does not engage in active stock selection or market timing. The fund follows a passive strategy, which means it aims to replicate the performance of the underlying index with minimal tracking error. This approach also helps in keeping the overall management costs lower than actively managed funds.
• Low-Cost Structure: One of the key advantages of this index fund is its low cost. Passive funds typically incur fewer transaction costs and management fees compared to actively managed funds. This makes the SBI Nifty India Consumption Index Fund - Direct (G) a cost-effective option for long-term investors who want to capture the growth potential of India's consumption sector.
• Long-Term Focus: The strategy is designed for investors who have a long-term investment horizon. The consumption sector in India is poised for sustained growth as disposable income rises, and more people enter the middle class. The fund offers investors the chance to participate in this structural growth story over an extended period.

By investing in companies that are leaders in the consumption space, the fund positions itself to capture growth from rising consumer demand across sectors, driven by India's expanding middle class and increasing urbanization.

Why Invest in SBI Nifty India Consumption Index Fund - Direct (G)?

The SBI Nifty India Consumption Index Fund - Direct (G) offers investors a simple, low-cost way to gain exposure to India’s growing consumption sector. Here’s why this fund could be an attractive investment for long-term investors:

• Exposure to India's Consumption Story: India’s consumption sector is set for long-term growth, fueled by a growing middle class, rising disposable incomes, and increasing urbanization. The fund offers a way to invest in companies that are positioned to benefit from this consumption-driven expansion. From daily essentials like food and beverages to big-ticket items like automobiles and healthcare services, the fund covers a wide array of industries.
• Capitalizing on India’s Growth Potential: India’s consumption sector is one of the fastest-growing segments of the economy. As the middle class expands and consumer spending increases, companies in sectors such as FMCG, retail, and automobiles are expected to see significant growth. By investing in these companies, the fund provides investors with the opportunity for long-term capital appreciation.
• Diversified Exposure: While the fund focuses on consumption, it also provides diversification across different sub-sectors. This includes large-cap FMCG companies, automobile manufacturers, healthcare providers, and retailers. This broad exposure reduces the risk associated with investing in a single sector or company.
• Low-Cost Passive Investment: As an index fund, the SBI Nifty India Consumption Index Fund - Direct (G) offers a cost-efficient way to invest in India’s consumption story. The fund has lower management fees compared to actively managed funds, making it an attractive option for long-term investors looking to reduce costs.
• Managed by Experienced Professionals: The fund is managed by a seasoned team at SBI Funds Management Ltd. Known for their disciplined approach, the team ensures that the fund closely tracks the performance of the Nifty India Consumption Index, aiming to minimize tracking error while maximizing returns.
• Long-Term Growth Opportunity: The fund is ideal for investors with a long-term investment horizon who want to benefit from the structural growth in India’s consumption sector. As more consumers enter the market and demand for goods and services rises, companies within the Nifty India Consumption Index are expected to experience sustained growth, providing the potential for long-term capital gains.

In summary, investing in the SBI Nifty India Consumption Index Fund - Direct (G) offers exposure to India’s robust consumption growth, with the added benefits of diversification and cost-efficiency.

Strength and Risks - SBI Nifty India Consumption Index Fund - Direct (G)

Strengths:

• High-Growth Sector Exposure: The fund invests in companies that are leading players in India’s growing consumption sector, which is expected to see strong demand over the coming years. This includes industries like FMCG, automobiles, retail, and healthcare, all of which are critical drivers of the country’s economic growth.
• Diversification within the Consumption Theme: Although it focuses on consumption, the fund is diversified across multiple sub-sectors. This reduces the risk of relying on a single industry or company, as the fund holds shares from a wide range of companies that benefit from India’s increasing consumer demand.
• Cost-Efficient Investing: As a passive index fund, the SBI Nifty India Consumption Index Fund - Direct (G) is structured to keep management and transaction costs low. This makes it an attractive option for long-term investors looking for cost-effective exposure to India’s consumption story.
• Experienced Management Team: Managed by a team with deep expertise in passive fund management, the fund benefits from a disciplined approach to tracking the index while minimizing tracking errors. This ensures that the portfolio is well-aligned with the performance of the Nifty India Consumption Index.
• Long-Term Growth Potential: India’s consumption sector is set for significant long-term growth as consumer spending increases. The fund provides investors with the opportunity to participate in this structural growth story and potentially earn strong returns over the long term.

Risks:

• Sector Concentration Risk: As the fund focuses on a single theme – consumption – it is subject to sector-specific risks. If the consumption sector faces a downturn due to economic factors or shifts in consumer behavior, the fund's performance could be adversely impacted.
• Market Volatility: Since the fund invests in equity markets, it is exposed to the inherent volatility of the stock market. Short-term fluctuations in the market can affect the value of the fund, although the long-term outlook for consumption remains positive.
• Tracking Error: The fund aims to replicate the performance of the Nifty India Consumption Index as closely as possible. However, there may be instances where the fund’s performance deviates from the index due to factors such as fund expenses, cash holdings, and market conditions.
• Limited Flexibility: Being a passive fund, the SBI Nifty India Consumption Index Fund - Direct (G) cannot take defensive positions in the event of market downturns or economic challenges. Unlike actively managed funds, it is bound to follow the composition of the Nifty India Consumption Index.

The SBI Nifty India Consumption Index Fund - Direct (G) provides investors with an easy and cost-effective way to gain exposure to India’s growing consumption sector. By investing in a diversified range of companies across industries such as FMCG, automobiles, and healthcare, the fund taps into the potential of India’s expanding consumer base. Its passive management approach ensures that costs are kept low, making it a suitable option for long-term investors seeking capital appreciation in the consumption space. Ideal for those with a long-term horizon, the fund offers a way to participate in India’s economic progress while managing risks through broad sector exposure.