Aditya Birla Sun Life Nifty India Defence Index Fund - NFO Details

In alignment with the Prime Minister's Atmanirbhar initiative, the fund is designed to strengthen India's defense production, foster the development of new technologies, and involve private companies more significantly in the defense sector. It aims to enhance currency stability by lowering the current account deficit, reducing reliance on dollar imports, and boosting foreign exchange reserves through increased exports. The fund also promotes self-reliance by prioritizing domestic procurement, thereby mitigating risks associated with embargoes. Additionally, it focuses on building research and development capabilities through public-private partnerships, creating a competitive environment for military-grade products.

Details of the Aditya Birla Sun Life Nifty India Defence Index Fund

Invest in Aditya Birla Sun Life Nifty India Defence Index Fund! With a minimum investment of just ₹500, this Open-Ended fund offers a unique opportunity to tap into India's growing defense sector. The NFO opens on 09-Aug-2024 and closes on 23-Aug-2024. 

*The Load Structure is subject to change from time to time and shall be implemented prospectively and will be calculated on First in First Out (FIFO) basis.

Investment Objective and Strategy

Objective:

The investment objective of the Scheme is to deliver returns that, before expenses, align with the total returns of securities represented by the Nifty India Defence Total Return Index, subject to tracking errors. The Scheme does not guarantee or indicate any specific returns, and there is no assurance that the investment objective will be achieved.

Investment Strategy:

The Scheme will follow passive investment strategy and will invest not less than 95% of its corpus in stocks comprising the underlying index and endeavour to track the benchmark index while minimizing the tracking error. The investment strategy would revolve around reducing the tracking error to the least possible through regular rebalancing of the portfolio, taking into account the change in weights of stocks in the index as well as the incremental collections / redemptions in the scheme. The AMC does not make any judgments about the investment merit of Nifty India Defence Total Return Index nor will it attempt to apply any economic, financial or market analysis. The Scheme may also invest in cash/cash equivalent and debt/ money market instruments including units of Liquid schemes, in compliance with Regulations to meet liquidity and expense requirements.

Why Invest in Aditya Birla Sun Life Nifty India Defence Index Fund?

This passive investment approach aims to track defense stocks using a market cap-based Defense Index, with the objective of generating long-term capital gains in the high-growth defense sector. It is designed for equity investors with a long-term investment horizon who are interested in the defense industry through an index-based fund. Additionally, the fund is well-suited for investors seeking exposure to a government policy-driven sector that tends to have a low correlation with the broader market during times of geopolitical instability.

Strength and Risks Aditya Birla Sun Life Nifty India Defence Index Fund

Strengths:

•    The Indian Defence sector is positioned for success according to Porter's classic theory. 
•    The competition is limited, as companies require government backing to establish themselves. 
•    The sector has high entry barriers because of its capital-intensive nature and evolving product cycles. 
•    Its niche capabilities and service offerings enable companies to maintain pricing independence. 
•    Additionally, there is a low threat of product substitution due to the high unit costs and long-term partnerships that facilitate ongoing upgrades. 
•    The market has significant growth potential, thanks to the low cost base for Indian companies. 
•    As demand in the sector increases, these companies are anticipated to gain a larger market share. 

Risks:

The Scheme will allocate at least 95% of its net assets to Equity and Equity-related instruments of the Nifty India Defence Index. Since this is a sectoral scheme, it will be subject to the risks associated with the constituents of the Nifty India Defence Index. As the Scheme focuses on investing in equity and equity-related instruments of companies within the Defense sector, there will likely be a high concentration of investments in this specific sector. Consequently, any volatility or adverse performance in the Defense sector or the individual stocks within it could significantly impact the overall performance of the Scheme.