Mirae Asset Nifty EV and New Age Automotive ETF: Here’s what you should know about India’s first EV ETF

Mirae Asset Investment Managers has introduced India’s inaugural exchange-traded fund (ETF) specialising in electric vehicles (EVs) and the emerging automotive sector, named the ‘Mirae Asset Nifty EV and New Age Automotive ETF’. This open-ended scheme is crafted to harness the sector’s promising long-term growth potential. Investors have the flexibility to trade units on stock exchanges, akin to other securities. The fund will follow the Nifty EV and New Age Automotive Total Return index.

The subscription period for the scheme begins on June 24, 2024, and concludes on July 5, 2024. Ekta Gala and Akshay Udeshi will serve as the managers for this scheme.

During the new fund offer (NFO) period, the scheme requires a minimum initial investment of ₹5,000, with additional investments in multiples of Re 1. The scheme will allocate 95-100% of its funds to securities listed in the Nifty EV and New Age Automotive index, and 0-5% to money market instruments, including tri-party repo agreements, debt securities, and units of debt/liquid schemes offered by domestic mutual funds.

Announcing the NFO, Swarup Anand Mohanty, Vice Chairman & CEO, Mirae Asset Investment Managers (India), said, “With the launch of India’s first ETF focused on the Electric Vehicles and New Age Automotive segment, we aim to offer investors a unique opportunity to participate in the future of mobility. We aim to provide avenues for long-term capital appreciation while supporting sustainable development in the automotive sector. This ETF underscores our commitment to innovation and aligning investment opportunities with evolving market trends.”

Key highlights of the scheme

The purpose of the scheme was enunciated by Siddharth Srivastava during the launch. Encapsulating what this fund has to offer, Srivastava, Head-ETF Products, Mirae Asset Investment Managers (India), added, “This product aims to capture the potential of India’s dynamic automotive industry. By investing in companies leading the charge in EV and new automotive technologies across the value chain, this new ETF will offer investors exposure to the innovative and rapidly evolving ecosystem in this space. With a focus on both global and domestic themes, this product adds value to our lineup of exclusive offerings providing investors with diversified opportunities in the electric vehicle and new-age automotive segment.”

Why invest in this ETF?

This ETF targets investors aiming for long-term growth spanning several years. Its main goal is to appreciate the investment value over time, rather than focusing on generating regular income. In addition to car manufacturers, the ETF will also include investments in various sectors of the industry such as battery manufacturers, parts suppliers, and potentially related technology firms. This approach provides investors with comprehensive exposure to the EV and new-age automotive value chain.

In addition to focusing on innovative companies, the ETF’s portfolio will encompass firms that have received Production Linked Incentives (PLI) in the automobile and battery sectors, as well as those involved in industry initiatives like Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME).

Companies of all sizes, from small startups to large established players, will be considered for inclusion in the index. While this approach offers the potential for higher growth, it also entails increased risk. Nonetheless, this broad strategy enables the ETF to encompass the full range of innovation in India’s EV and new-age automotive sectors.

Warning bells triggered

But, then there is a caveat that you must be warned against. Investing in this ETF entails exposure to early-stage companies and new technologies, potentially leading to higher volatility compared to traditional funds. The ETF’s performance hinges on the successful growth of these emerging segments. Therefore, considering this investment is advisable only if you are comfortable with potential fluctuations and have confidence in the future prospects of these industries. It could serve as a compelling avenue for diversified exposure to this dynamic sector.

The ETF targets long-term capital growth by providing exposure to a expanding sector, but it also carries inherent risks associated with its focus on a new and evolving industry. While investing in a burgeoning sector can be exhilarating, it’s crucial to maintain a long-term perspective before making any investment decisions.