Tata Asset Management launches India’s first tourism Index Fund

Mumbai, July 10^th, 2024: 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.