ICICI Prudential Mutual Fund has filed papers with market regulator SEBI for the ICICI Prudential Nifty Next 50 ETF. The AMC already has an Index Fund which tracks the Nifty Next 50 with an AUM of Rs 230 crore. This new ETF will also track the Nifty Next 50 TRI. TRI means total returns index, which assumes that dividends are reinvested in the fund. The Nifty Next 50 as the name suggests is the bottom half (50 companies) of the Nifty 100. In other words, it is the Nifty 100 excluding the Nifty 50.
ICICI MF’s new filing comes close on the heels of HDFC Mutual Fund recently filing its own Nifty Next 50 ETF as we wrote here.
The Nifty Next 50 index delivered a CAGR of 20.57% in the five years ending on 30th April 2018, far higher than the 12.61% CAGR delivered by the Nifty 50. Its one year return at the same endpoint was 16.56%. The index is led by companies like JSW Steel, Britannia Industries, Motherson Sumi, Godrej Consumer Products and Ashok Leyland. Consumer Goods are its largest component at 23.95% followed by financials at 18.17% and automobiles at 12.34%. Unlike the Nifty 50, it weightage to IT stocks is just 1.32% whereas the Nifty 50 assigns a 12.68% weight to IT stocks.
Very few ETFs track the Nifty Next 50, unlike the main index, Nifty 50. SBI ETF Nifty Next 50 was launched on 16th March 2015 and currently has an AUM of just Rs 13 crore. The lack of AUM is not due to poor returns with the fund delivering a CAGR 15.4% over the three odd years since its launch. The UTI Nifty Next 50 ETF also tracks the Nifty Next 50. It was launched on 28th July 2017.
ICICI Prudential Nifty Next 50 ETF will be required to invest 95%-100% of its assets in the securities comprising the Nifty Next 50. The balance 5% can be placed in debt or money market instruments. The scheme will be managed by Kayzad Eghlim who also manages various other ICICI Prudential ETFs such as the ICICI Pru iWin Nifty ETF and Sensex ETF as well as Bharat 22. However, the fund manager plays a relatively small role in an ETF.
The units of the scheme will be available for trading on exchanges after listing. Investors can buy them after listing as well. The minimum investment amount has been set at Rs 5,000 at NFO stage. After listing, investors can buy units of the fund as per the prevailing NAV or market price.
The New Fund Offer of the fund will be launched only if the draft filed with SEBI is approved by the regulator.