 "EV, Electric vehicle")
India's first Electric Vehicle and New Age Automotive ETF is here: Key details
A new era for Indian investors has dawned with the launch of India's first Exchange Traded Fund (ETF) dedicated to the burgeoning Electric Vehicles (EV) and New Age Automotive segment. Mirae Asset Investment Managers on Thursday unveiled the 'Mirae Asset Nifty EV and New Age Automotive ETF,' an open-ended scheme designed to capitalize on the long-term growth prospects of this dynamic sector.
The ETF tracks the Nifty EV and New Age Automotive Total Return Index and seeks to capture companies participating in emerging segments like Electric Vehicles, Hybrid Vehicles, Battery Manufacturing etc. across sectors and market cap segments, but will also intend to capture initiatives and possibly future disruptions like Hydrogen-fuel cell, Autonomous Vehicles etc.
The ETF goes beyond just established names in the EV space. The index it tracks aims to capture a wide spectrum of companies across various sectors and market capitalizations. This includes:
Established EV Players: Leading manufacturers of electric vehicles and related components.
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Hybrid Vehicle Manufacturers: Companies developing and producing hybrid vehicles that bridge the gap between traditional gasoline-powered cars and full EVs.
Battery Manufacturers: Firms involved in the production of batteries, a critical component for both EVs and hybrid vehicles.
Future-Oriented Technologies: The index also seeks to capture companies involved in potentially disruptive technologies like hydrogen fuel cells and autonomous vehicles.
Investing in government initiatives:
The ETF doesn't stop at just tracking industry trends. It also strives to align with government initiatives aimed at accelerating EV adoption and fostering domestic manufacturing capabilities. The fund specifically targets companies participating in programs like:
FAME (Faster Adoption and Manufacturing of Electric Vehicles): A government scheme designed to incentivize the purchase and production of EVs in India.
PLI (Production Linked Incentive): A program offering financial incentives to attract investments in key sectors, including automobiles and battery storage.
The New Fund Offer (NFO) will open for subscription on June 24, 2024 and close on July 05, 2024.
The scheme will be managed by Ms. Ekta Gala and Mr. Akshay Udeshi.
In the scheme, the minimum initial investment during NFO will be Rs 5,000 with subsequent investments being multiples of Re 1.
Index methodology:
Universe:
• Stocks forming part/going to form part of the Nifty 500 index
• Bottom 10 percentile stocks based on 6 month average daily turnover are ineligible for inclusion in the index
Eligible Universe :
1. Group A: Manufacturing of 2W/3W/4W/PV/CV Electric and New age automotive vehicles
2. Group B: Manufacturing of batteries for Electric and New age automotive vehicles
3. Group C.1 Manufacturing of components for Electric and New age automotive vehicles / Electric and New age
automotive vehicles
4. Group C.2 Manufacturing/ Supply of raw material for Electric and New age automotive vehicles/batteries/components
5. Group C.3 Provide advanced automotive technology for Electric and New age automotive vehicles
6. Group D: Part of eligible universe of Group A, B or C and PLI for Advanced Automotive or ACC batteries or FAME or SMEV
Stock Selection criteria:
Selection of the stocks will be done in either of the following manner:
• Select all stocks forming part of the Group A and Group B
• Select top 5 stocks based on 6 month average free-float market capitalization from each of the Group C.1, Group
C.2 and Group C.3
• Select top 5 stocks based on 6 month average free-float market capitalization from Group D that are not selected in
any of the steps mentioned above.
Index Rebalancing:
• Index shall be rebalanced on a quarterly basis in March, June, September and December
• Weight of each stock in the index is based on its free float market capitalization
• Aggregate weight of the stocks belonging to Group A shall be capped at 40%
• The weight of each stock belonging to Group A shall be capped at 8%. All other stocks are capped at 4%
Portfolio of Nifty EV and New Age Automotive Index
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The total exposure to automobile manufacturers will be capped at 40% at the time of index rebalancing and hence 60% exposure will be towards segments like auto ancillaries, battery, battery chemicals, automation and connectivity etc.
