HDFC Asset Management Launches New FTSE India ETF to Offer Seamless Market Exposure

HDFC Asset Management Launches New FTSE India ETF to Offer Seamless Market Exposure​

HDFC Asset Management Company Limited has officially announced the launch of the HDFC FTSE India ETF, a new open-ended scheme designed to replicate and track the performance of the FTSE India Index (TRI). This strategic move provides investors with a streamlined vehicle to gain exposure to large and mid-cap Indian companies within the popular Exchange Traded Fund (ETF) format.

The fund is structured to offer returns that are commensurate with the performance of the underlying index, subject to tracking error. By mirroring the FTSE India Index, the scheme provides a transparent and diversified investment avenue for those seeking long-term growth in the domestic equity markets.

Strategic Investment Objective and Benchmark​

The HDFC FTSE India ETF is specifically designed to provide an avenue for investors seeking exposure to large and mid-cap Indian companies. The primary objective of the scheme is to generate returns that align with the performance of the FTSE India Index (TRI) before fees and expenses.

To ensure consistency, the fund will hold all securities that constitute the underlying index in the same proportion as the index. The AMC intends to monitor tracking error on an ongoing basis, with an expectation that under normal market conditions, such tracking error should not exceed 2.00% per annum based on daily rolling returns over the last 12 months.

Portfolio Allocation and Investment Strategy​

The scheme maintains a disciplined investment mandate, where at least 95% of net assets will be invested in securities covered by the FTSE India Index (TRI), with a maximum limit of 100%. A small allocation of up to 5% may be held in debt securities and money market instruments for liquidity purposes.

Adopting a passive management approach, the fund manager will endeavor to invest in stocks forming part of the underlying index in the same ratio as per the current index weights. While the investment policy is primarily passive, the Fund Manager retains the authority to deviate from the established pattern for short-term periods solely for defensive considerations, provided such adjustments are rebalanced within 7 business days.

Accessing the Market via Exchange and Direct Methods​

Investors have multiple avenues to access the HDFC FTSE India ETF. Units will be listed on both the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE), where they can be traded continuously during market hours. On these exchanges, the minimum investment requirement is just one unit.

For institutional participants, the fund offers a direct participation mechanism involving "Creation Unit Size." Market Makers and Large Investors can subscribe to or redeem units directly with the fund in increments of 12,500 units at Intra-day NAV prices. This structure allows for efficient capital deployment and helps maintain a liquid secondary market for all retail participants.

Risk Management and Transparency Measures​

The AMC has implemented a robust risk mitigation strategy focused on minimizing tracking errors through regular portfolio rebalancing. The scheme explicitly identifies risks such as price fluctuations in equity markets, interest rate volatility in the debt segment, and liquidity risks associated with specific securities.

To ensure transparency, HDFC Asset Management will provide comprehensive periodic disclosures. This includes daily performance updates (after six months of existence), monthly Portfolio Disclosures, and regular reporting on Tracking Error and Index constituent changes. Investors can access these updates via the official website at www.hdfcfund.com.

Operational Details for New Fund Offer​

During the New Fund Offer (NFO) period, the minimum application amount is set at ₹500 per application in multiples of Re. 1. The AMC has established a minimum target amount of ₹5 Crore to be raised during the NFO period; failure to meet this target will result in the refund of subscription amounts to applicants.

The fund will also offer switching facilities for existing unitholders of other HDFC Mutual Fund schemes, allowing them to reallocate their holdings into the new ETF conveniently. All units are issued and traded exclusively in dematerialized (electronic) form through NSDL/CDSL depositories.