To replicate the return of the Nifty PSU Bank index, HDFC Asset Management has come up with the HDFC Nifty PSU Bank ETF. The NFO for the same has been launched on January 12 and will remain open until January 23.

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For the unversed, NFO, or new fund offer, is similar to an IPO, wherein new investors can invest in the investment option via the new fund offer route.

“This ETF will give investors the benefit of diversified exposure to multiple PSU banking stocks through a single instrument. Furthermore, HDFC AMC brings its extensive expertise in managing Index Solutions to this ETF, with a track record of over 20 years of managing Index Solutions,” noted the company’s release.

The majority of the analysts remain constructive on the space, given the huge opportunity the sector offers and the continuing improvement in financials.

Public sector undertaking (PSU) banks have shown sustained improvement in their fundamentals over the past several years, including a decade-high capital adequacy ratio (CRAR) and a substantial reduction in gross non-performing assets (GNPA) ratios.

Despite these improvements, the valuations of PSU banks may not be fully reflecting the improved fundamentals, creating a potential opportunity for investors who have a high-risk appetite, according to the release.

Interestingly, the Nifty PSU Bank index over one year has generated an impressive 37 per cent return