SBI Mutual Fund will launch an open-ended fund of fund (FoF) scheme investing in its SBI BSE India Defence ETF, offering investors exposure to companies linked to India’s defence sector.
The New Fund Offer (NFO) of the SBI BSE India Defence ETF FoF will open for subscription on November 16 and close on November 30.
The scheme will invest at least 95% and up to 100% of its assets in units of the SBI BSE India Defence ETF. The remaining portion, up to 5%, can be invested in government securities with a maturity of up to one year, Treasury Bills, triparty repo and units of liquid mutual funds.
The underlying ETF tracks the BSE India Defence index, which aims to measure the performance of stocks associated with the defence theme. The index includes companies belonging to specific basic industries as well as those having an association with the defence sector.
The fund will be benchmarked against the BSE India Defence TRI. Viral Chhadva will manage the scheme.
The minimum investment during the NFO period will be ₹5,000, with additional investments starting at ₹1,000.
The scheme will have an exit load of 1% for redemptions made within 15 days of allotment. No exit load will apply after 15 days.
The scheme’s investment objective is to generate returns that closely correspond to the performance of the underlying SBI BSE India Defence ETF. However, the fund house has clarified that there is no assurance that the objective will be achieved.
Since the scheme is a fund of fund, investors will bear the expenses of both the FoF and the underlying ETF.
Thematic exposure and risks
The scheme provides exposure to the defence theme through an underlying ETF rather than directly investing in individual defence stocks. Its performance will therefore be linked to the underlying ETF and the companies included in the BSE India Defence index.
As a thematic fund, its portfolio will be concentrated in companies linked to a particular sector. Returns could be affected by changes in defence spending, government policies, order flows, company valuations and broader market conditions.
Investors should also account for the additional expense of the FoF structure while evaluating the scheme.
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Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.