Tata Asset Management Company has launched the first-ever tourism index mutual fund in India. The Tata Nifty India Tourism Index Fund, announced on July 8, will track the Nifty India Tourism Index and include companies from the Nifty 500. The New Fund Offer (NFO) will close on July 19, 2024.
This open-ended index fund aims to invest in India’s rapidly growing travel, tourism, and hospitality sectors. The minimum investment during the NFO period is Rs 5,000, with increments allowed in multiples of Rs 1. There is no entry load, but an exit load of 0.25% of the applicable net asset value (NAV) will apply if units are redeemed within 15 days of allotment.
The fund focuses on companies leading their respective segments, benefiting from rising disposable incomes, changing consumer preferences, and increased discretionary spending. The portfolio includes:
– Hotels and resorts (32%)
– Airlines (19%)
– Restaurants (19%)
– Tour and travel-related services (16%)
– Airports and airport services (10%)
– Luggage (3%)
Anand Vardarajan, Chief Business Officer of Tata Asset Management, highlighted the factors contributing to the sector’s growth, such as higher disposable incomes, improved infrastructure like highways and railways, and the development of new airports. “We are witnessing exponential growth in domestic aviation, hotels, restaurants, and travel, which augurs very well for the tourism segment,” he said.
He also noted the surge in various types of travel, including pilgrimage, business, medical, and leisure, making a strong case for investing in the tourism sector to benefit from its growth.
Economic Resilience and its Impact on Tourism Index Mutual Fund
The fund’s launch comes at a time when the Indian economy is demonstrating significant resilience, driven by robust investment and consumption. The expanding middle class in India is boosting aspirational and experiential travel, supported by substantial infrastructure investments that have increased air route capacities and made travel more accessible.
Technological advancements have transformed the travel and restaurant industries, with online restaurant aggregators and a growing delivery economy playing key roles. Social media platforms also enhance the desire to travel by showcasing diverse destinations and experiences. “India’s travel and tourism expenditure is projected to soar from $140 billion in 2019 to an impressive $406 billion by 2030,” Vardarajan added.
The Tata Nifty India Tourism Index Fund includes 17 stocks, ensuring a balanced representation of all tourism-related segments. Each stock has a maximum capping limit of 20% in the index, which can accommodate up to 30 stocks from the parent Nifty 500 index. This approach ensures optimal diversification and exposure to the thriving tourism sector in India.
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