Tata Mutual Fund launches Tata Nifty India Digital Exchange Traded Fund

• An open-ended exchange traded fund replicating / tracking Nifty India Digital Index
• NFO opens on March 14, 2022, and closes on March 25, 2022

Mumbai: Tata Mutual Fund launched Tata Nifty India Digital Exchange Traded Fund — an open-ended exchange traded fund replicating / tracking Nifty India Digital Index.

Key highlights

• Spend on the digital transformation has gathered pace over the last two years and is now cutting across businesses, economic activities and various consumption chains. This is not only to optimise cost but to also drive revenues.
• Traditional players are being challenged by the new-age companies who are re-imagining businesses or the modes of delivery of various goods and services.
• These new-age companies not only benefit from availability of risk capital but have also seen higher penetration and wider acceptance by the customers due to the pandemic.
• With NSE 500 as the universe for Nifty India Digital Index, basic industries are defined to cover companies which are focused on digital technology by the Index constructor NSE.
• The index selects top 30 companies based on market cap which align to the pre-defined set of basic industries.

Speaking on the launch, Meeta Shetty, senior analyst and fund manager, Tata Mutual Fund, said, “Tata Nifty India Digital Exchange Traded Fund is a passive portfolio replicating a pre-defined Digital India Index. Current characteristics of Nifty India Digital Index based on its index construction methodology represents the digital change agent companies and digital enablers. Digital transformation is still in the early stages, and we expect more new age companies to achieve scale, raise capital and get listed over the next 3-5 years. As this transformation unfolds and the new age companies become a more prominent part of the economy and equity markets, we see the emergence of new hybrid segments like consumer tech, fintech, edtech, etc. The portfolio, over a period, would have adequate representation to digital enablers as well ie IT services / cloud transformation / SaaS companies. The Indian IT services companies which are ahead in digital and cloud capabilities will also be an important part of this segment along with companies which are in the automation / robotics / IoT space.

“As a result of the structure of the index, we believe that the Tata Nifty India Digital Exchange Traded Fund will be able to leverage on the evolving digital scenario in the long term.”

Commenting on the launch Anand Vardarajan, business head, Banking, Alternate Products and Product Strategy, said, “The digital layer is getting added in almost all industries and we have seen that it can support the traditional businesses very well. In some cases, we are also seeing digital front displacing the traditional business. Digital is a very interesting space, although it is still evolving, especially the platform companies. We believe, this segment will see its own set of winners and losers, but the winners here can be multi-year growth opportunities and being asset-light models, these companies can also generate higher ROEs in the longer run. Through Nifty India Digital Index we aim to capture the growth of these digital companies.

“Our existing offering Tata Digital India Fund is largely inclined towards digital enablers ie large and mega IT services companies into cloud transformation and data analytics. With more equity market company listings and inclusion of the same in the Nifty Digital Index basis the pre-defined methodology of the Index constructor NSE, the share of new-age digital companies would tend to increase, thus increasing the pie of alpha generators vis a vis steady compounders.”

CONSTITUENTS OF NIFTY INDIA DIGITAL INDEX AS ON 09.03.2022

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