Axis Mutual Fund has launched a new fund offer of ‘Axis Banking ETF’. It is an exchange traded fund that offers investors an opportunity to invest in the biggest banks in India at their own pace as it gives exposure to them all in a neatly packed bite-sized exchange traded fund. The fund is designed in a manner that it tracks the performance of the 12 largest banks listed on the NSE. Only banking stocks that are allowed to trade in the F & O segment are eligible to be constituent of the Index. Currently, the index has 83.3 per cent exposure to private banks and ~11.7 per cent exposure to PSU banks. The new fund offers (NFO) opens for subscription from October 16 to October 29.
“Banking is the life blood of the financial sector. Its importance in our economy has been growing consistently as we see the long term shift to financialization of household assets and greater demand for financial products,” says the release by Axis Mutual Fund. The weight of banking in the Indian markets has been going up steadily over the last decade and it is now the largest sector in the key equity market benchmarks such as Nifty 50. Even in recent quarters, the banking sector has shown resilience despite the pandemic. The release mentions that given the scale and the added thrust that the government and regulatory bodies are providing to the banks, the sector is poised for a revolution. Banks are increasingly funding retail masses and offering services backed by technology that are increasing their potential to scale business.

Apart from being cost effective, ETFs let investors invest at real-time prices as opposed to end of day price by sector funds. It protects their investments from the inflows and outflows of short-term investors. Furthermore, ETFs are best suited to earn asset-class linked performance and are touted to be one of the most flexible tools for gaining instant exposure to the markets, thereby equitizing cash.