DSP MF launches Nifty Private Bank Index Fund

DSP Mutual Fund has launched the DSP Nifty Private Bank Index Fund, an open-ended scheme tracking the Nifty Private Bank Index. This fund offers investors a focused approach to the private banking sector.

The New Fund Offer (NFO) opens on February 14, 2025, and closes on February 28, 2025.

Investors can apply through lump-sum investments or systematic investment plans (SIPs).

The fund provides exposure to the four largest private banks, which make up around 80% of the index. These banks benefit from customer trust, better access to capital, and economies of scale, supporting sustained growth.

Private banks in India have doubled their market share in the last two decades.

The Nifty Private Bank Index has underperformed in recent years, but its current valuations are below the 10-year average. This makes the sector well-positioned for a turnaround, the fund house said.

Anil Ghelani, CFA, Head of Passive Investments & Products at DSP Mutual Fund, stated, “The concentration of larger banks within the Nifty Private Bank Index can be an advantage. Leading banks globally demonstrate sustainable growth due to customer trust, access to capital, and economies of scale. This fund provides a streamlined approach to India’s private banking sector.”

Diipesh Shah, Fund Manager at DSP Mutual Fund, added, “The DSP Nifty Private Bank Index Fund presents a tax-efficient way to access the sector. Unlike direct stock investments, mutual funds do not incur capital gains tax on rebalancing or dividends. Given that many index constituents trade below historical averages, this offers an attractive entry point.”

The fund follows a Free Float Market Capitalisation-based methodology and is rebalanced semi-annually. It is ideal for investors seeking targeted exposure to India’s private banking sector with long-term growth potential, as per the fund house.