Baroda BNP Paribas Mutual Fund NFO: Baroda BNP Paribas Mutual Fund has launched its New Fund Offer (NFO), Baroda BNP Paribas Energy Opportunities Fund. This NFO will be open for subscription from 21 January 2025 to 4 February 2025. The scheme is designed to enable investors to benefit from the continuously growing energy sector as India transitions from a developing to a developed economy.
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NFO: Investment Strategy of the Fund
Baroda BNP Paribas Energy Opportunities Fund will allocate 80% of its net assets to stocks of companies related to energy theme. These include mining and oil exploration companies, oil refining companies, energy generating companies, power transmission companies, power and gas distribution companies, energy accessories and energy services companies.
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NFO: Who should invest?
Investors who want focused investment in energy companies. Investors who want to participate in India’s growth journey. Investors who are looking for new sectors/themes to diversify their portfolio. However, only those whose target is for at least 3 years or more should invest in this fund.
Demand for energy is increasing
It is said that “energy is the key to prosperity”, said Suresh Soni, CEO, Baroda BNP Paribas Asset Management India Pvt Ltd (AMC). If we look at history, the demand for energy increases during this transition from developing to developing economies. India’s GDP is estimated to grow by 1.9 times in the next 5 years, hence India’s energy demand is also likely to increase by 1.7 times. Baroda BNP Paribas Energy Opportunities Fund is poised to open up lucrative investment opportunities for investors as growth in India’s energy sector continues to accelerate. There is a huge demand for energy in homes, agriculture, industry, commercial establishments and infrastructure in India.
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Energy theme: Opportunity to take advantage of growth in the sector
Sanjay Chawla, Chief Investment Officer – Equity, Baroda BNP Paribas Asset Management India Pvt Ltd (AMC) and fund manager for the scheme, said there is a broad theme for energy investments, which includes the Nifty 500 index across different sectors and sub-sectors. Contains about one third of the shares. Additionally, our research shows that the Nifty Energy Total Return Index (Nifty Energy TRI) not only has lower price-to-equity and price-to-book ratios compared to the Nifty 500 Total Return Index, but it also outperforms the broader market. It also claims to have higher dividend yield and faster earnings growth compared to .
Strong performance of energy sector
According to research conducted by Baroda BNP Paribas AMC, Nifty Energy TRI has outperformed Nifty 500 TRI over the periods of 3, 5, 7 and 10 years ending December 31, 2024. This shows the potential of the energy theme to outperform over the long term, which could deliver better returns for investors over time. Suresh Soni said that our Baroda BNP Paribas Energy Opportunities Fund can be considered ideal for equity investors with a holding period of 3 years or more. This scheme will focus on investment opportunities in traditional energy chains as well as new energy transition.
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Government’s focus on energy sector
The government’s focus is on improving India’s energy security, under which the share of natural gas will be more than doubled to 15 percent in the energy mix by 2030. India’s coal security will be promoted. Additionally, the government plans to invite bids for 50 GW of renewable energy capacity annually between FY 24-28, which will increase India’s solar power capacity by 4 times and wind power by 2.5 times by 2031-32. The aim of these structural changes is to open up better investment opportunities for investors.
In line with the Government’s focus on this key sector, several Central Government schemes to promote the energy sector are currently underway, including Production Linked Incentive (PLI) on High Efficiency Solar Modules, National Solar Mission Rooftop Scheme, , Viability Gap Funding for Battery Energy Storage Systems and National Green Hydrogen Mission.
(Disclaimer: We have given information about NFO here and it is not an investment advice. It is not guaranteed whether the past performance of any index will continue in future or not. There are risks in the market, hence expert opinion before investing. take)
