Mumbai: DSP Mutual Fund has announced the launch of the DSP Nifty Bank Index Fund, an open-ended scheme that tracks the Nifty Bank Index. This fund provides investors with an opportunity to gain exposure to 12 of the most liquid and large Indian banking stocks through a single investment. The Nifty Bank Index includes a mix of both private and public sector banks, offering a diversified banking sector investment.

Historically, the Nifty Bank Index has outperformed the broader Nifty 50 Index over the long term. Since January 2000, the Nifty Bank Index has grown 67 times, compared to the Nifty 50’s 21-fold increase. However, the Nifty Bank Index is currently experiencing its longest period of underperformance relative to the Nifty 50 on a 5-year rolling basis. This underperformance has resulted in more attractive sector valuations, both compared to historical averages and other sectors.

Key financial metrics for banks, such as return ratios and capital adequacy, have been steadily improving. The Return on Assets (RoAs) for Indian banks has more than tripled since the lows of 2018, and non-performing assets (NPAs) are at their lowest levels in years. The banking sector is currently trading at just a 5% premium to its 10-year average price-to-book multiple, presenting an appealing entry point for investors anticipating a sector resurgence.

The New Fund Offer for the DSP Nifty Bank Index Fund will be open for subscription from May 15th, 2024, until May 27th, 2024.

“A robust banking system is the key to economic growth and development, especially for a fast-growing country like India. At DSP, we endeavor to bring the right products at the right time for our investors. We recommend DSP Nifty Bank Index Fund to investors with longer time horizons, especially based on the long-term performance of the Nifty Bank Index,” said Anil Ghelani, CFA, Head – Passive Investments & Products, DSP Mutual Fund.

DSP is a serious player in the Passive Investments segment with a dedicated investment team as well as business team. We are gradually expanding our product range and with this launch we will have 22 products available for your investment allocation across all asset classes – Equity, Debt, Commodities, and the entire market with a wide range of products of index funds, ETFs and rules based smart beta products,” concluded Gurjeet Kalra, Business Head – Passive Funds, DSP Mutual Fund.