NFO alert! DSP Mutual Fund launches Nifty Bank Index Fund | All you need to know

financialexpress.com:

DSP Mutual Fund on May 15 announced the launch of DSP Nifty Bank Index Fund, an open-ended scheme tracking Nifty Bank Index. The fund will offer an opportunity to invest in banking stocks at reasonable valuations.

Through this single fund, investors will be able to invest in the 12 most liquid and large Indian banking stocks. Nifty Bank Index comprises private as well as public sector banks.

“Historically, the Nifty Bank Index has delivered much better long-term returns compared to the broader Nifty 50 Index. Since January 2000, the Nifty Bank Index has grown 67 times compared to the Nifty 50 which grew 21 times over the same period,” the MF house said in a statement, citing data from MFI Explorer, Internal.

However, the Nifty Bank Index is currently witnessing the longest stretch of underperformance compared to the Nifty 50 on a 5-year rolling basis which has led to it being relatively better placed in terms of sector valuations versus their own historical averages as well as relative to other sectors, it said.

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Key financial metrics for banks like return ratios and capital adequacy have also been improving steadily. Return on Assets (RoAs) of Indian banks have improved over 3 times from the lows of 2018, the statement said citing Bloomberg data. NPAs are also at one of the lowest levels. With the sector trading at just a 5% premium to its 10-year average price-to-book multiple, and NPAs now at multi-year lows, it offers an attractive entry point for investors to benefit from the banking sector’s likely resurgence.

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