People love to travel to explore new destinations and experiences. Indians are taking more and more trips to explore new places and make priceless memories with their loved ones. How it would be if you could harness travel industry growth. Tata Mutual Funds has launched the Tata Nifty India Tourism Index Fund to harness the growth of the travel and tourism industry.
Table of Contents
What is Nifty India Tourism Index?
The Tata Nifty India Tourism Index Fund aims to replicate the Nifty India Tourism Index. The Nifty India Tourism Index stocks methodology is as follows:
- The eligible universe for the index entails Nifty 500 constituents that belong to the following basic industries:
1. Hotel & Resorts
2. Tour, Travel Related Services
3. Restaurants
4. Airline
5. Airport & Airport services
6. Companies that are into manufacturing trolley bags, suitcases, and luggage - The Index can consist of a maximum of 30 stocks with a weight cap of 20%
- The index is reviewed Semi-Annually (March and September) and rebalanced quarterly (March, June, September and December) basis Free Float Market Capitalization.
- The Index P/E ratio is 58.42 and the P/B ratio is 21.77. While the dividend yield is 0.17.
Nifty India Tourism Index Returns
| Index Returns (%) | QTD | YTD | 1 Year | 5 Years | Since Inception |
| Price Return | 10.75 | 22.38 | 45.42 | 21.94 | 11.75 |
| Total Return | 10.82 | 22.46 | 45.75 | 22.25 | 12.47 |
Fund Strategy
The Tata Tourism Fund is a passively managed Index fund that aims to replicate/track the performance of the Nifty India Tourism Index (TRI).
The Scheme invests in securities constituting the Index in the same proportion as in the Index. The Scheme will invest at least 95% of its total assets in the securities comprising the Underlying Index.
The Scheme may also invest in debt/money market instruments including units of Mutual Funds to meet the liquidity and expense requirements.
The fund is ideal for those investors who would like to invest in passively managed funds investing in a portfolio of companies forming part of Tourism as represented by the Index.
6 Reasons to Invest in Tata Nifty India Tourism Index Fund*
- Surge in Travel Frequency: The number of people taking three trips a year increased by 25% in 2023 compared to 2019 (source: MakeMyTrip). Travel now includes short and long vacations, staycations, workcations, getaways, road trips, experience travel, and spiritual tourism. People want to have new experiences and feel new emotions.
- Exploring Uncharted Territories: More people are driving to getaway locations and adding unexplored destinations near metros to their itineraries. They are booking experiential stays in places like Jim Corbett, Munnar, and Mysore. Searches for spiritual destinations like Ayodhya, Ujjain, and Badrinath have surged by over 90% in the last two years. Cities like Lucknow, Indore, and Bhubaneswar saw the highest rise in searches last year (Source: MakeMyTrip).
- Growing Middle-Income Group: The middle-income group represents approximately 31% of India’s population and is expected to reach approximately 47% by 2031, driving growth in domestic appetite for travel and tourism (Source: PRICE). Increased domestic flight demand is now seen coming from Tier II and Tier III cities, with hotel chains expanding to these regions.
- Government’s Spending on Infrastructure: Various government schemes such as launching new air routes, developing tourist destinations, and investing in airport infrastructure and semi-high-speed trains are boosting tourism.
- Expansion of Airline Fleets: The development of new airports and expansion of airline fleets have made air travel more affordable. Coupled with increased disposable incomes, this has led to a surge in air travel passengers.
- Evolving Food Industry Trends: As more women join the workforce and urbanization increases, there’s growth in Quick Service Restaurants (QSRs), food processing companies, and cloud kitchens. Urban consumers are eating out more, not just to dine but also to socialize and experiment with various cuisines, leading to a rise in dining out and ordering in behaviours.
*Entire data and reasons taken from Tata mutual fund website.
Why Choose Tata Nifty India Tourism Index Fund?
The Tata Nifty India Tourism Index Fund is well-positioned to benefit from these trends. The fund is offering investors an opportunity to capitalize on the robust growth of India’s tourism industry.
This Tourism index captures the full spectrum of the travel and tourism segment. Thus making it a smart investment choice, for those looking to tap into this booming market.
Why Choose an Index Fund?
Index funds offer several advantages:
- Simple and Cost-Effective: They provide a hassle-free and cost-effective way to invest in a specific segment.
- Transparency: Fund holdings are based on a well-defined index, ensuring clear visibility.
- Lower Costs: Typically, index funds have lower expense ratios as they are passively managed.
Who Should Invest?
This fund is ideal for:
- Long-Term Growth Seekers: Investors with a long-term investment horizon who believe in the growth potential of the Indian tourism sector.
- Risk-Tolerant Investors: Suitable for those with a high-risk appetite, willing to invest in sector-specific funds.
- Focused Investors: Individuals seeking focused exposure to the tourism segment without broad diversification.
Tata Nifty India Tourism Index Fund –Details
| Scheme Name | Tata Nifty India Tourism Index Fund |
| Investment Objective | The investment objective of the scheme is to provide returns, before expenses, that are commensurate with the performance of Nifty India Tourism Index (TRI), subject to tracking error. |
| Type of Scheme | An open-ended scheme replicating / tracking Nifty India Tourism Index (TRI). |
| NFO Period | New Fund Offer Opens On – 8 th July 2024 New Fund Offer Closes On– 19th July 2024 Scheme Re-Opens For Continuous Sale & Repurchase On -29th July 2024 |
| New Fund Offer price:This is the price per unit that the investors have to pay to invest during the NFO | The units being offered will have a face value of Rs. 10 /- per unit. |
| Fund Manager | Kapil Menon |
| Benchmark | Nifty India Tourism Index (TRI) |
| Min. Investment amount | Rs. 5,000/- And in Multiple of Re.1/- Thereafter |
| Min. SIP amount | Rs. 100 |
| Load Structure: | |
| Entry Load | Not Applicable |
| Exit Load | 0.25% of the applicable NAV, if redeemed on or before 15 days from the date of allotment. |
| Risk | High |
Conclusion
Tata Nifty India Tourism Index Fund is an open-ended theme-based Index Fund. The fund target is highly specific and therefore carries a high investment risk. The Fund is a passively managed fund tracking Index returns. The fund can be added to investment portfolio, if you want to add diversification in your portfolio.
But at any time, the fund should not be the core of your portfolio. This is true people love to travel and spend a lot of money travelling. This fund is capturing investment returns from this spending habit of ours. This fund is very new in this category and may perform well in the near future.
