Groww Nifty India Defence ETF : Date, Review, NAV

Groww Nifty India Defence ETF: Complete Overview

Groww Mutual Fund launched the Groww Nifty India Defence ETF. The open-ended scheme intends to track the Nifty India Defence Index-TRI.

AMC Groww Asset Management Limited has set Groww Nifty India Defence ETF price of Rs.500 and a multiple of Rs.1 afterward. This new fund offer is open from September 23, 2024 to 04 October 2024. This mutual fund scheme is open for ongoing sale and repurchase on 18 October 2024. The Scheme carries a very high risk.

Investment Objective

This Scheme will invest in Nifty India Defence securities in the same proportion or weightage as the index for generating long-term return growth to generate returns before expenses that track the overall performance of the Nifty India Defence Index, subject to tracking errors. Returns are not assured.

The order book stands at 94,000 Cr for HAL, which is 3x the income of FY 2024, according to the report by Fund House. Expanding order books are visible for each of the 15 index companies.

95-100% of the securities in the Scheme are proposed to be invested in Nifty India Defence Index constituents and the balance 0-5% will be invested in money market instruments or debt securities or units of domestic mutual funds, whether debt or liquid schemes.

To know the details of this new NFO Mutual Fund keep reading.

 

What is Nifty India Defence Index?

The Nifty India Defence Index, which comprises 58% of mid-cap and small-cap companies, measures the performance of India's defense firms across large, mid, and small-cap categories. Additionally, the companies in the index may have robust order books, which guarantees future cash flow visibility. Through a 20% cap on stock weights, the index keeps any one business from controlling the whole portfolio.

 

Why Invest in Groww Nifty India Defence ETF?

The Indian defence industry is growing quickly.

Along with a planned $138 billion investment pipeline from FY 2024 to FY 2026, the Government has set a production target of Rs.3 lac crore by FY 2029.

The goal for defence exports is likewise high, with Rs.50,000 crore by FY 2029.

Increased budgetary allocations and the government's AtmaNirbhar Bharat project support the industry. The Rs.6.22 lac crore defence budget for FY2024-2025 has been determined.

The Groww Nifty India Defence ETF NFO will track the Nifty India Defence Index.

Major participants in this index include Hindustan Aeronautics and Bharat Electronics. The performance of leading defense businesses is captured, providing exposure to large-cap, mid-cap, and small-cap markets.

Investment Strategy

This fund primarily invests with the goal of long-term capital appreciation. The Nifty India Defence Index, which replicates the well-known Indian defense industry companies, is tracked by the underlying exchange-traded fund (ETF). Consequently, it is thought that this will take advantage of growth prospects in this specific industry, as growth is anticipated and India's defence sector will be modernized.

The goal of the passive investment strategy is to mimic the underlying ETF's performance. As such, this service offers investors a convenient means of being exposed to a diverse portfolio of defence-related companies. Ideal for investors who intend to hold a strategic sector for an extended time and anticipate growth in the upcoming years.

Nifty India Defence Index Returns 

In the past year and five years, the Index has yielded total returns of 116.91% and 60.46%, respectively.

Fund Suitability

For those investors seeking long-term capital growth, this fund may be a good fit because it primarily invests in equity and equity-related securities from the Nifty India Defence Index.

Scheme Plan: 

This Scheme has no plans.

Groww Mutual Fund Details

• AUM of Rs.857.24 crore (as of 30 Jun 2024)

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Fund Overview

How to Invest in The Scheme After the Closure of The NFO?

If you have missed participating in the NFO and now want to invest in the same Scheme on a continuous basis, then on 18 October 2024  when the Scheme will reopen; you will have the option to participate and invest directly in the Mutual Fund by spending at NAV based price by logging on to your Demat account and search for “Groww Nifty India Defence ETF”

 

Asset Allocation (% of Total Assets) of the Scheme's portfolio will be as follows:

 

Peers of Groww Nifty India Defence ETF

Since this scheme is new, hence no comparable data on its past performance against its peers is available.

 

Risk Factors In Such Funds

• Due to the fund's focus solely on the defense sector, it is at risk from defense-specific vulnerabilities. Changes in Government policies, targets, or even cutbacks in defense budgets can severely disrupt the operations of even the most successful companies in the industry.

• The ETF may lack the breadth offered in more generic or all-sector funds as it limits investment to a few defence market players. Such a narrow focus may result in higher risk and volatility when compared to funds in the general market.

• The performance of this ETF is also subject to risks associated with the market as a whole, similar to the performance of any other equity fund. Changes across a few sectors in the economy (like rising inflation or interest rates) or economic recessions or instability in the global marketplace may affect the fund and cause negative returns.

• Along with Terror Attacks, State defence policy and foreign relations also affect the defense sector. Events that change the internal and external relations of countries affect the incomes of barracks entrepreneurs directly (export controls or other changes in defence contracts).

 

Past Performance of Nifty India Defence Funds

Groww Nifty India Defence ETF- Fund Managers:

• Mr. Abhishek Jain

 

Conclusion

The Groww Nifty India ETF presents a remarkable way of investing in the ever-increasing defense industry in India. It monitors the Nifty India Defence Index, which enables the investor to gain exposure to its prominent defense companies. However, while it is rated with a high growing potential, it also ranks as a high risk of investment due to the geographical focus on one sector. An appropriate opinion should be sought from the investors to determine their risk appetite for this fund.

Disclaimer: This NFO analysis is provided solely for informative purposes and should not be considered investment advice. Always conduct research and talk with a financial advisor before investing.