DSP Investment Managers launches Nifty Bank ETF, says bank valuations look attractive despite the rally

• DSP Investment Managers has launched the Nifty Bank Exchange Traded Fund (ETF), an open-ended scheme that tracks the Nifty Bank Index.
• The mutual fund says despite the rally in bank stocks recently, the valuations are still attractive.
• The new fund offer (NFO) for DSP Nifty Bank ETF will open on December 26, 2022 and close on December 28, 2022.
  

DSP Investment Managers has launched the Nifty Bank Exchange Traded Fund (ETF), an open-ended scheme that will track the Nifty Bank Index, amid a strong rally in the banking stocks, especially the public sector banks.

The Nifty Bank index has spiked 24% in the last six months, beating the benchmark 50-stock Nifty50 index’s 13.4% gains during this period.

DSP Investment Managers said that despite the rally in banking stocks, they are still available at attractive valuations. It added that banking stocks currently contribute the highest share of profits among all sectors in the major indices. The top 5 banks are also seeing strong credit growth and an improvement in asset quality, the fund noted.

ETFs are a type of pooled investment securities that operate much like a mutual fund but are bought and sold the same as a stock on the exchange. The price of an ETF is tracked to an underlying index – in this case, the DSP’s Nifty Bank ETF will follow the Nifty Bank index.

Banks capitalise on robust credit growth, margin expansion

Banks have also benefited from an expansion in net interest margins post Covid. Robust credit growth, and improvement in operating margins and return on equity are other positives that indicate a healthy outlook for banking as a theme, says the fund house.

It also said that historical data since 2000 showed that the Nifty Bank index had outperformed the broader Nifty50 index in 15 out of 23 years.

“The banking sector is expected to see further value unlocking due to the fundamental factors and that coupled with attractive valuations presents an attractive opportunity for investors,” said Anil Ghelani, CFA, head – passive investments and products at DSP Investment Managers.

The fund house advises investors to consider this product with a long-term goal.

The new fund offer (NFO) for DSP Nifty Bank ETF will open on December 26, 2022 and close on December 28, 2022.


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