New NFO launched: Should you invest in NIFTY pharma ETF?

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Nippon India has recently launched NFO called “NIFTY Pharma ETF”. It is an ETF scheme that is an Exchange Traded Fund scheme. Demat account is mandatory to do trading in the scheme. Purchase and redemption can be done only through the stock exchange.

Objective:

The investment objective of the scheme is to provide investment returns closely corresponding to the total returns of the securities as represented by the Nifty Pharma Index before expenses, subject to tracking errors. However, there can be no assurance or guarantee that the investment objective of the Scheme will be achieved.

NFO dates:

NFO is launched on 21st June and will close on 28th June. On 12th July, the scheme will reopen. It is an open-ended equity scheme.

Minimum amount:

The minimum amount for purchase is 1000 Rs. You can invest the amount in multiples of 1 Rs.

Charges:

A transaction charge of Rs. 150 will be charged on purchase/subscription of Rs. 10000 and above for the new investor

A transaction charge of Rs. 100 will be applicable on purchase/subscription of Rs. 10000 and above for the existing investor

Risk profile:

As it is an equity scheme, the risk is high. Moreover, it is going to invest in the pharma sector’s top 10 companies. So, it is a sectoral fund, and due to which the risk is high.

It will invest in?

It will invest in NIFTY’s top 10 pharma companies which are listed in NSE.

It will do investment in Equities and equity-related instruments, money market instruments, and derivatives instruments.

95 to 100% investment will be done in securities constituting the NIFTY pharma index and 5 to 0% investment will be in money market instruments.

Expense ratio:

The expense ratio is below 1% for the scheme.

Load:

Entry load is the amount that is charged at the time of entry. Exit load is the charges levied at the time of exit.

Entry and exit load is nil for the scheme.

However, 0.005% stamp duty charges will be applicable on purchase.

Plans available:

Direct and regular investment plans are available.

The direct plan is a plan in which the investment is done directly; whereas, in the case of regular plans, a broker is involved. NAV for both the plans shall be different.

Fund manager:

The fund manager is Mr. Mehul Dama who is a graduate and C.A., who has experience of almost 14 years.

Benefits:

Because it is an ETF scheme, real-time purchases and sales are possible here.

It is going to invest in Pharma companies and they are fastly growing in these times.

Who should invest?

Since it is an equity scheme, the risk is higher. Generally, equity schemes give good returns in long term. An investor who has a high-risk appetite and can afford to stay for the long-term can go with this. Apart from that, SID and KIM should be properly studied before doing an investment.

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