The Fact Maker

Tata Asset Management launches India’s first tourism Index Fund

Bengaluru: Tata Asset Management Company, a pioneer in the mutual fund industry, has launched nation’s first tourism index fund, comprising a collection of companies forming part of Nifty 500. The Tata Nifty India Tourism Index Fund will track the Nifty India Tourism Index (TRI, i.e., total returns index).

This open-ended index fund has been meticulously designed to provide investors with exposure to India’s fastest growing companies from travel, tourism and hospitality businesses. The companies forming the index are leaders in their respective segments and have benefitted from the rising disposable income levels, evolving tastes of the Indian consumer and sustained higher discretionary spends.

At the launch of the index fund, Anand Vardarajan, Chief Business Officer at Tata Asset Management said, “High disposable income, infrastructure developments like better highway connectivity, improved railway comfort & speed and so many new airports have made travel easy, swift and safe. We are witnessing exponential growth in domestic aviation, hotels, restaurants and travel which augurs very well for the tourism segment.  All types of travel, be it pilgrimage, business, medical or leisure are registering a surge.  This makes a compelling case for looking at tourism as a segment and how one could invest and aim to benefit from the growth of this sector.”

The launch of the Tata Nifty India Tourism Index Fund comes at a time when the Indian economy is showing remarkable resilience driven by robust investment and consumption. The growing middle class in India is fueling a surge in aspirational and experiential travel bolstered by significant investment in infrastructure, which have expanded air route capacities, making travel more accessible.

Additionally, technology advancements have revolutionized the travel and restaurant space, with the rise of online restaurant aggregators and a burgeoning delivery economy. Social media platforms further amplify the desire to travel, showcasing diverse destinations and experiences. “As a result, India’s travel and tourism expenditure is projected to soar from $140 billion in 2019 to an impressive $406 billion by 2030 (Source: Euromonitor, Systematix Institutional Research),” added Mr Vardarajan.

Index Methodology:

The index methodology for the Tata Nifty India Tourism Index Fund that currently comprises of 17 stocks (as on 21st June 2024) adheres to stringent criteria to ensure optimal representation of all Tourism related segments, with a maximum stock level capping limit of 20% in the index. This index can house a maximum of 30 stocks from the parent index Nifty 500. With a focus on diversification and risk management, the index constituents are weighted basis free-float market capitalization.

Stock selection parameter:

IndustryIndex weights (as on 21st June 2024)
Hotels and resorts32%
Tour, Travel Related Services16%
Airports and airport services10%

The launch of the index fund caters to the evolving need of our investors and provides access to promising segment poised for potential growth in the Indian economy.

The scheme will endeavor to minimize the tracking error by:

·         Rebalancing of the portfolio

·         Setting off incremental subscriptions against redemptions

·         Fast track in expediting in deployment of cash

·         Maintaining low levels of cash

Enclosed below are the details about the Tata Nifty India Tourism Index Fund:

Scheme NameTata Nifty India Tourism Index Fund
NFO Period8th July 2024 to 19th July 2024
Scheme re-opens on or before29th July 2024
Investment ObjectiveThe investment objective of the scheme is to provide returns, before expenses, that commensurate with the performance of Nifty India Tourism Index (TRI), subject to tracking error. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved. The scheme does not assure or guarantee any returns
Type of SchemeAn open-ended scheme replicating / tracking Nifty India Tourism Index (TRI)
Fund ManagerKapil Menon
BenchmarkNifty India Tourism Index (TRI)
Min. Application Amount (During NFO)Rs 5,000/- and in multiple of Re.1/- thereafter
Load StructureEntry Load: Not Applicable (Pursuant to provision no. 10.4.1.a of SEBI Master Circular on Mutual Fund dated May 19, 2023, no entry load will be charged by the Scheme to the investor) Exit Load: 0.25 % of the applicable NAV, if redeemed on or before 15 days from the date of allotment. Exit load (if any) charged to the unit holders by the Mutual Fund on redemption (including switch-out) of units shall be credited to the scheme net of Goods & Services Tax. Goods & Services Tax on exit load, if any, shall be paid out of the exit load proceeds.