SBI Automotive Opportunities Fund

India's largest mutual fund house SBI mutual fund is going to launch it's new fund offer "SBI Automotive Opportunities Fund", which is open for subscription from 17th May. And it will remain open till 31st May 2024.

The objective of the scheme is to generate long-term capital appreciation by investing in equity and equity related instruments of companies that are engaged in automotive and allied business activities theme. 

India is the 3rd largest Automotive industry in the world in terms of production and in two wheeler manufacturing India ranks second. India is  the leader in tractor manufacturing in the world. Automotive industry has four segments namely, Original equipment manufacturers(OEMs), Auto ancillaries, Auto export and electric mobility. 

The SBI Automotive Opportunities Fund provides investors with concentrated exposure to Indian automotive companies. India ranks as the world's fourth largest vehicle market. The funds brochure highlights that the penetration of two-wheelers and four-wheelers per 1000 people in India remains notably lower compared to other economics, As the brochure mentioned 860 people own a car in every thousand people In USA, In China it is 223 per thousand people, where as the number in India is only 34 per thousand people, indicating substantial growth potential in the future in this theme.

The thematic fund will measure it's performance against the Nifty Auto Total Return Index, which has a growth of 15.5% compounded annual growth rate. During this period, the Nifty 50 has shown a growth of 14.3%. In the last year alone, the Nifty auto TRI surged by 71.7%, outpacing the Nifty 50 TRI's 26.5% and the Nifty 500 TRI's 39.3% gains.

Investing in sector-specific and themed funds can potentially lead to big gains for investors. In fact, many times, the top-performing mutual fund in a year belongs to this category. For instance, last year, funds that concentrated on infrastructure firms and public sector utilities did really well.

But when a perticular sector faces tough times or downturn, these specialised funds might not do as well because they focussed heavily on that sector. On the other hand, diversified funds spread out of risk, so investors aren't too affected if one sector isn't doing great.

Disclaimer
Mutual fund investment are subject to market risks, read all scheme related documents carefully

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