UTI Unleashes 'New Age Consumption' ETF, Targeting Aspirational Spending of Modern Consumers

UTI Unleashes 'New Age Consumption' ETF, Targeting Aspirational Spending of Modern Consumers​

Launch and Core Offering Details​

UTI Mutual Fund has introduced the UTI Nifty India New Age Consumption Exchange Traded Fund (ETF). This new open-ended scheme is designed to provide investors with exposure to the rapidly evolving landscape of consumer spending in India. The fund aims for returns that correspond to the total return of securities represented by the underlying index, subject only to tracking error.

The ETF provides a moderate risk profile, aligning with its mandate as a consumption proxy asset. Investors seeking investment in equity portfolios are advised to consult their financial advisors before making any commitment.

Investment Strategy and Index Methodology​

The scheme employs a passive indexing approach, diligently tracking the Nifty India New Age Consumption Total Return Index (TRI). The fund is mandated to invest at least 95% of its total assets into stocks that comprise the underlying index. This ensures tight replication of the chosen consumer theme.

A smaller portion of up to 5% of net assets may be allocated to money market instruments or Liquid Mutual Funds to meet liquidity needs, as per SEBI regulations. The investment strategy is focused on mimicking the index composition and maintaining portfolio balance.

The underlying Nifty India New Age Consumption Index tracks companies catering to discretionary and aspirational spending. This includes sectors like Consumer Services, Automobile, and Realty, with a commitment that no single stock exceeds 25% of the weight in non-thematic indexes.

Risk Mitigation and Compliance​

As an ETF, the scheme is designed to mirror the index performance rather than attempting active investment calls. The fund seeks to minimize tracking error as much as possible. Tracking error, defined as the annualized standard deviation of daily return differences, shall not exceed 2%.

The UTI AMC maintains a robust risk mitigation framework through its independent Risk Management division. This includes continuous monitoring and defining internal limits on key parameters across all schemes.

Operational Costs and Market Mechanics​

The ETF boasts attractive cost structures for investors from day one. There is no Entry Load or Exit Load charged to the unit holders under this scheme. The AMC has estimated that the maximum Total Expense Ratio (TER) to be charged to the scheme is up to 0.90%.

For those investing during the New Fund Offer (NFO), the minimum initial investment amount is set at ₹5,000/- and in multiples of Re.1/- thereafter. The units are planned for listing on exchanges like NSE and BSE following the NFO period.

Key Investment Guidelines and Structure​

The fund's primary objective is achieving a return that matches the underlying index, which serves as its benchmark. This commitment to replication ensures investors gain exposure directly proportional to the Index’s movements. The investment strategy may involve using derivatives for portfolio balancing purposes where permissible under SEBI regulations.

Regarding management expertise, Mr. Sharwan Kumar Goyal, with 20 years of experience, is designated as the dedicated Fund Manager. His team also includes Mr. Ayush Jain and Mr. Lokesh Kulthia, supporting the passive strategy implementation.

Investor Accessibility​

The scheme offers flexibility in unit acquisition based on investment size and participant type. The units can be bought or sold on stock exchanges at traded prices by any eligible investor. Furthermore, Market Makers and Authorised Participants have dedicated avenues for direct subscription and redemption with UTI Mutual Fund for large-scale transactions.

The fund aims to maintain transparency through multiple disclosure channels. It will provide monthly portfolio disclosures as well as the Net Asset Value (NAV) daily on its website and AMFI's platform.