Edelweiss Introduces BSE Capital Markets & Insurance ETF for Focused Sectoral Exposure

Publish Date: Dec 17, 2024

Edelweiss Mutual Fund has launched Edelweiss BSE Capital Markets & Insurance ETF, it is an open-ended exchange traded scheme replicating/tracking BSE Capital Markets & Insurance Total Return Index.

Investors are increasingly drawn to the capital markets and insurance sectors, recognizing their critical role in India's economic growth. Rising stock market participation, fueled by SIPs and dematerialized account growth, signals a shift in investment behaviour. Meanwhile, the insurance sector is witnessing rapid growth driven by greater awareness, digital adoption, and innovative products, making these industries attractive for focused investment opportunities.

BSE Capital Markets & Insurance Index is a sectoral index designed to track the performance of companies in India's capital markets and insurance industries. Over the past few years, the index has showcased strong growth, driven by increasing retail participation in equity markets, a surge in mutual fund investments, and expanding demand for insurance products.

[Read: Best Thematic Mutual Funds for 2025: Power Up Your Portfolio]

To address this demand, Edelweiss Mutual Fund has launched an NFO designed to replicate the performance of the index. With its focus on capturing the growth potential of these vital industries, this NFO is positioned as an attractive option for those looking to align their investments with India's financial services growth story.

Details of Edelweiss BSE Capital Markets & Insurance ETF:

* The Scheme does not offer any Plans/Options for investment.
(Source: Scheme Information Document)

What will be the investment strategy for Edelweiss BSE Capital Markets & Insurance ETF?

Edelweiss BSE Capital Markets & Insurance ETF Scheme will track BSE Capital Markets & Insurance Index and will use a 'passive' or indexing approach to endeavour to achieve the scheme's investment objective. Unlike other funds, the scheme will not try to outperform its benchmark and will not seek temporary defensive positions when the market declines or appears overvalued.

Since the scheme is an exchange traded fund, the scheme will only invest in the securities constituting the underlying index.

About BSE Capital Markets & Insurance ETF

BSE Capital Markets &Insurance is an index that measures the performance of companies across the Industry Groups - Capital Market and Insurance, selected based free-float market capitalization from the BSE 500 Index.

These sectors are critical to the financial ecosystem, facilitating capital allocation and providing financial security to individuals and businesses.

(Source: Edelweiss BSE Capital Markets & Insurance ETF - PPT)

The index typically includes a mix of established market leaders and emerging players in the capital markets and insurance domains. SEBI's reforms and IRDAI's guidelines impact capital markets and insurance companies' performance significantly.

The strategy will focus on providing investors with exposure to companies in the capital markets and insurance sectors. However, it will be the endeavour of the fund managers to maintain an optimal portfolio turnover rate commensurate with the investment objective of the Scheme and the purchase/ redemption transactions on an ongoing basis in the Scheme.

How will the scheme allocate its assets?

Under normal circumstances, Edelweiss BSE Capital Markets & Insurance ETF will hold an allocation of 95% to 100% in Securities covered by BSE Capital Markets & Insurance Index, and 0% to 5% in Money Market Instruments, cash and cash equivalent and/or units of Liquid scheme.

Should investments in Edelweiss BSE Capital Markets & Insurance ETF be considered?

Edelweiss BSE Capital Markets & Insurance ETF provides exposure to companies operating in the capital markets (like stock exchanges, depositories, and asset management firms) and the insurance industry, both of which are poised for long-term growth.

With India's increasing retail participation in equity markets, expanding mutual fund penetration, and the rising demand for insurance products, these sectors are positioned as significant contributors to economic growth.

One of the key advantages of this ETF is its passive investment strategy, which replicates the BSE Capital Markets & Insurance Index. This ensures that investors gain exposure to a diversified basket of stocks representing the sector's leaders and emerging players. Additionally, ETFs are generally low-cost investment options a prudent choice for cost-conscious investors seeking sector-specific exposure.

However, it is important to note that investing in a sectoral ETF comes with its risks. The ETF is concentrated in two specific industries, making it susceptible to sectoral downturns or regulatory changes that could negatively impact these markets. Additionally, the financial services sector is cyclical in nature, meaning performance can be influenced by broader economic and market conditions.

Those who believe in the potential of India's financial services ecosystem and are looking to diversify their portfolio with focused sectoral exposure may find this ETF a compelling option.