Beaten down metals look ripe for a boom, ETFs may be the right bet
Aggressive investors looking for a thematic bet in their equity portfolios could consider an allocation to exchange-traded funds (ETFs) tracking the Nifty Metal index, which has dropped about 12.5% in the past month. The benchmark Nifty fell 6.3% in this period.
«Valuations have also cooled down now making it an attractive bet with a 2-3 year view,» said Prateek Sinha, founder of Deep Wealth.
The Nifty Metal index trades at a price-to-book (PB) ratio of 2.59 times, lower than 3.6 times of the Nifty 50 index.
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ICICI Prudential and Mirae Asset are the two mutual funds with ETFs that track the Nifty Metal index.
Investment advisors said this ETF is suited for investors with higher risk appetite because, unlike a diversified equity fund, this product has 15 stocks with the top holdings being Tata Steel, Hindalco, JSW Steel, Adani Enterprises and Vedanta. Moreover, returns from sectoral indices tend to be lumpy. At the same time, it is less risky than holding individual stocks.
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