 "SBI automotive opportunities fund: Know details before investing")
The SBI Mutual Fund last week launched its first actively managed automotive sector mutual fund. It is designed to invest in equity and equity-linked instruments of companies in the automotive and allied industries, both domestically and globally. Launched on May 17, the fund aims to capitalise on the growth and export opportunities within the automotive sector.
“The Indian automotive sector presents an attractive opportunity as domestic demand and auto exports have been drivers of growth,” said Shamsher Singh, Managing Director & Chief Executive Officer, SBI Funds Management, at the launch of the scheme.
Fund overview
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The SBI automotive opportunities fund is an open-ended equity scheme that seeks to generate long-term capital appreciation for investors. Its objective is to provide investors with exposure to companies engaged in automotive and allied business activities, aiming for long-term growth and capital appreciation. The New Fund Offer (NFO) is open for subscription until May 31, 2024, with a minimum investment of Rs 5,000. There is no entry load, but an exit load of 1 per cent applies if units are redeemed within one year from the allotment. This exit load becomes nil after one year.
Investment strategy
The fund primarily allocates 80-100 per cent of its assets in equity and equity-related instruments, including derivatives, of companies within the automotive sector. Additionally, it diversifies its portfolio by investing in other instruments such as debt, money market instruments, real estate investment trust, and infrastructure investment trust. The fund may also explore opportunities in foreign securities, subject to regulatory limits, to enhance its investment portfolio.
Who should invest?
The SBI automotive opportunities fund is suitable for investors seeking long-term capital gains from equities in companies poised to benefit from the automotive industry's expansion. The fund presents an opportunity for investors to tap into the potential of the automotive ecosystem in India.
What are the risks of the fund?
Thematic funds like the SBI automotive opportunities fund are exposed to sector-specific risks. Any adverse developments within the automotive industry, such as changes in consumer preferences, technological disruptions, or regulatory challenges, can affect the fund's performance.
New fund offer, hence no track record.
Investments in the automotive sector can be subject to market volatility, influenced by factors such as economic conditions, consumer demand, regulatory changes, and global market trends.