Your Ticket to Railway Sector Growth: Groww Nifty India Railways PSU Index Fund & ETF

Groww Mutual Fund has launched Groww Nifty India Railways PSU Index Fund and ETF, it is an open-ended scheme replicating/ tracking Nifty India Railways PSU Index - TRI

As the backbone of India's transport network, the railway sector is undergoing a transformative phase, driven by government initiatives to modernize operations, enhance capacity, and promote sustainability. Public sector undertakings (PSUs) play a pivotal role in this ecosystem, contributing to areas such as rail manufacturing, infrastructure development, and freight operations.

The Groww NFO, which mirrors the Nifty India Railways PSUs Index, is designed to capture the growth potential of this niche sector, offering diversification and long-term wealth creation opportunities.

[Read: 5 Railway Mutual Funds to Ride the Growth of India's Rail Network]

What will be the investment strategy for Groww Nifty India Railways PSU Index Fund and ETF?

Groww Nifty India Railways PSU Index Fund and ETF will be managed passively with investments in stocks in the same proportion as in the Nifty India Railways PSU Index.

The investment strategy of these schemes will be to invest in a basket of securities forming part of Nifty India Railways PSU Index in similar weight proportion. It would revolve around reducing the tracking error to the least possible through regular rebalancing of the portfolio, considering the change in weights of stocks in the Index as well as the incremental collections/redemptions in the Scheme.

A part of the funds may be invested in debt and money market instruments, to meet the liquidity requirements. Subject to the regulations and the applicable guidelines the Scheme may invest in the schemes of Mutual Funds. The investment strategy shall be in line with the asset allocation.

About Nifty India Railways PSU Index

Nifty India Railways PSU Index aims to track the performance of PSUs from the Nifty 500 which are either owned by the Ministry of Railways (classified as core group) or cater to the Indian Railways (classified as non-core group).

These companies contribute significantly to India's railway infrastructure, operations, and associated services. The index includes entities engaged in diverse segments such as rolling stock manufacturing, rail infrastructure development, and other allied sectors.

Nifty India Railways PSUs Index is ideal for those looking to invest in India's rapidly evolving railway sector, which benefits from government initiatives, increased budgetary allocations, and modernization efforts. It serves as a focused investment avenue to capitalize on the growth opportunities in this key infrastructure segment.

How will the scheme allocate its assets?

Under normal circumstances, Groww Nifty India Railways PSU Index Fund and ETF will hold an allocation of 95% to 100% in Equity and Equity related securities of companies constituting the underlying index - Nifty India Railways PSU Index and 0% to 5% in Money market instruments / debt securities, Instruments and/or units of debt/liquid schemes of domestic Mutual Funds.

Should investments in Groww Nifty India Railways PSU Index Fund and ETF be considered?

Groww Nifty India Railways PSU Index Fund and ETF mirrors the Nifty India Railways PSUs Index, offering exposure to public sector undertakings (PSUs) pivotal to the railway ecosystem.

With the government's ongoing focus on modernization and increasing budget allocations for railways, this fund taps into a growth-oriented sector with strong long-term potential. Additionally, PSUs in the index often enjoy stable revenue streams, driven by government contracts and policies, which could translate to relatively lower risk compared to private sector counterparts.

Another highlight is the low-cost passive investment approach. By investing in this index fund or ETF, investors can benefit from systematic tracking of the sector without the need for active management, reducing expense ratios.

While the sector offers immense potential, it is not without risks. The performance of the Groww Nifty India Railways PSU Index Fund depends heavily on government policies and budgetary priorities. Any reduction in railway expenditure or policy shifts could impact growth. Investors should also consider the inherent cyclicality of the railway sector, which may affect short-term performance.

Investing in the Groww Nifty India Railways PSU Index Fund and ETF could be a strategic move for those looking to capitalize on India's expanding railway infrastructure.