Upcoming NFO: SBI Mutual Fund Files Draft Papers for SBI BSE India Defence ETF

SBI Mutual Fund has filed the draft Scheme Information Document (SID) with the Securities and Exchange Board of India (SEBI) for the proposed SBI BSE India Defence ETF. The proposed scheme is an open-ended exchange traded fund (ETF) that will track the BSE India Defence Index.  

According to the draft, the fund will follow a passive investment strategy and seek to mirror the returns of the benchmark index, subject to tracking error. The document adds that there is no assurance that the investment objective will be met.  

Portfolio Composition 

As outlined in the draft, 95% to 100% of the scheme's assets will be invested in companies that are part of the BSE India Defence Index. Up to 5% may be held in government securities, treasury bills, triparty repos or units of liquid mutual funds to manage liquidity.  

The scheme may also use equity derivatives for rebalancing or when index constituents are temporarily unavailable. The annual tracking error is expected to remain below 2% under normal market conditions.  

Investment and Trading Framework 

The minimum investment during the New Fund Offer (NFO) has been proposed at ₹5,000, with further investments allowed in multiples of ₹1. The NFO dates have not been announced.  

Once allotted, the ETF units are proposed to be listed on the NSE and BSE, where they can be bought and sold in a minimum lot of one unit. The scheme will not charge an exit load. Market makers and large investors will transact directly with the fund in creation units of 50,000 units.  

Other Scheme Features 

The draft states that the Net Asset Value (NAV) will be published on every business day, while the indicative NAV (iNAV) will be updated during trading hours. The scheme may participate in stock lending but will not undertake short selling.  

The fund manager is expected to deploy money collected during the NFO within 30 business days from the date of allotment, subject to the provisions laid down in the scheme document.  

Read More: NFO Alert: Edelweiss Mutual Fund Launches Edelweiss Nifty REITs & Realty Index Fund! 

Conclusion 

The proposed ETF is structured as a passive fund linked to the BSE India Defence Index. The draft document sets out its investment allocation, subscription terms, and trading framework ahead of launch. 

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.   
 
Mutual Fund Investments are subject to market risks, read all the related documents carefully before investing.