DSP Mutual Fund has launched Nifty Private Bank Index Fund. This is an open-ended scheme, which will track the Nifty Private Bank Index. This fund gives investors an opportunity to take advantage of the growth of the private banking sector. This New Fund Offer (NFO) has opened for investment on February 14. It will close on February 28.
You can also invest through SIP
Investors can invest in this NFO through lump sum or SIP. This fund will invest in the shares of the four largest private banks. These banks have a weightage of about 80 percent in the Nifty Bank Index. Customers trust these banks. They do not face any problem in raising capital. These are large-sized banks, due to which they do not face any problem in achieving growth. In the last two decades, private banks have contributed significantly to India's banking sector growth.
Good opportunity to invest in banking sector
The Nifty Private Bank Index has been performing poorly for some time now. Its current valuation is lower than the 10-year average valuation. The performance of these banks is expected to improve going forward. This is a good time to invest in banking stocks. Investors who want to invest in private bank stocks can invest in this new fund offer. Before this, they should consult their financial advisor.
Customer trust in big banks
Anil Ghelani, Head (Passive Investments & Products) and CFA, DSP Mutual Fund, said that the concentration of big banks in the Nifty Private Bank Index can be beneficial for investors. Big banks generally perform well because they have the trust of customers. This fund gives an opportunity to take advantage of the growth of the private banking sector in India.
Should you invest?
Deepesh Shah, Fund Manager, DSP Mutual Fund, said that DSP Nifty Private Bank Index Fund gives an opportunity to take advantage of this sector in a tax-efficient way. Unlike investing directly in stocks, there is no need to pay capital gains tax on rebalancing or dividends in mutual funds. Since many stocks of the Nifty Private Bank Index are currently available at prices lower than their historical averages, this is the right time to invest in them.
Also read: What is special for taxpayers in the new Income Tax Code 2025?
Experts say that instead of investing in NFO, it is better to invest in funds already available in the market. There are already many funds in the market which focus on the banking sector. The track record of these funds can be seen. However, this fund will invest only in the shares of big private banks, so there is not much risk in investing in it.
