SBI has launched a new scheme called ‘SBI Energy Opportunity Fund’ , which is an open-ended equity scheme following the energy theme. As the country is developing, its energy consumption is bound to grow in the future. This rising demand creates robust investment opportunities across various energy segments. The emphasis of the Government is also to promote the use of alternate energy in lieu of conventional energy. India supports global green energy goals, actively influencing international climate policies. Initiatives like the International Solar Alliance and International Bioenergy Alliance showcase its commitment to a sustainable future. India’s diverse renewable energy mix offers a distinct advantage. Solar and wind power peaks differ, creating natural storage capacity. Combined with readily available hydro power, this forms a cost-effective and sustainable alternative to traditional batteries.
The major focus of the Indian Government is to support and develop the solar energy sector. In the Interim Budget for the fiscal year 2024-25 in India, Finance Minister Nirmala Sitharaman reiterated the government’s dedication to electrifying one crore households using rooftop solar installations. The Pradhan Mantri Suryodaya Yojana, the flagship initiative behind this commitment, strives to furnish complimentary electricity to these households by empowering them to produce solar power independently.
During the interim budget speech, Ms Sitharaman added, “Through rooftop solarisation, one crore households will be enabled to obtain up to 300 units of free electricity every month, this would translate to benefits of ₹15,000-18,000 annually for households from free solar electricity and selling the surplus to the distribution companies.”
The budget papers unveiled on February 02, 2024, clearly signal a noteworthy surge in government expenditure on rooftop solar power initiatives. The spike from ₹2,167 crore in 2023-24 to ₹4,555 crore for 2024-25 underscores the government’s dedication to advancing this renewable energy source. This corresponds with the objectives delineated in the Pradhan Mantri Suryodaya Yojana.
The expansion of India’s solar power sector is propelled by several key factors, including the decreasing costs of solar technology, increasing demand for renewable energy, strong government support, and the prevalence of large-scale solar projects currently dominating the installed capacity. The growth in the Indian solar energy sector is truly remarkable, offering enticing prospects for potential investors.
Index
Investment Objectives
The investment objective of the scheme is to provide investors with opportunities for long term capital appreciation by investing in equity and equity related instruments of companies engaging in activities such as exploration, production, distribution, transportation and processing of traditional & new energy including but not limited to sectors such as oil & gas, utilities and power.
Portfolio Strategy
Barbel portfolio approach with an optimal mix of traditional energy (Oil, Natural Gas, Coal, Nuclear) & new energy (Solar, Wind, Hydrogen, Bio) and power utility companies helps in reducing return volatility and offer better risk adjusted returns.
Plans and Options
Regular & Direct Plan; Both plans provide two options – Growth Option and Income Distribution cum capital withdrawal (IDCW) Option.
Application Amount
Minimum Investment Amount: Rs. 5000/- and in multiples of Re. 1 thereafter;
Additional Purchase Amount: Rs. 1000/- and in multiples of Re. 1 thereafter
Exit Load
For exit on or before 1 year from the date of allotment: 1% and
For exit after 1 year from the date of allotment: Nil
The AMC reserves the right to modify / change the load structure on a prospective basis.
Important Dates
NFO Open Date: 06-Feb-2024
NFO Close Date: 20-Feb-2024
Allotment Date: 26-Feb-2024
Other Energy Funds
There are some other energy funds available in the market for which the investors should focus on. Some of such schemes are given below:
Tata Resources & Energy Fund
The Tata Resources & Energy Fund primarily targets companies operating in the resources and energy sectors in India, with a preference for large-cap stocks. The fund predominantly allocates its investments to companies engaged in the resources sector (including metals, mining, and commodities) and the energy sector (encompassing oil, gas, power, and renewables) within the Indian economy. It maintains a relatively modest portfolio size compared to certain other diversified equity funds.
Nippon India Power & Infra Fund
The Nippon India Power & Infra Fund is a mutual fund that focuses on investing in equity and equity-related instruments of companies involved in or associated with the power and infrastructure sectors in India, including power generation, transmission, distribution, renewable energy, construction, and transportation. The primary objective of the fund is to attain long-term capital appreciation through investments in these companies.
DSP Natural Resources and New Energy Fund
This is an open-ended equity mutual fund scheme provided by DSP Mutual Fund, focusing on investments in companies within the natural resources and energy sectors. These sectors encompass oil and gas, metals and mining, renewable energy, and utilities.
This fund aims to attain long-term capital appreciation by investing in a diverse portfolio of equity and equity-related instruments from companies involved in or associated with the natural resources and energy sectors, both in India and globally. The fund manager chooses stocks through a process of fundamental analysis, focusing on their potential for sustained long-term growth.
For more information go to the following link:
DSP Natural Resources and New Energy Fund
Conclusion
Considering mutual funds as an avenue for investing in energy stocks holds promise for investors aiming for long-term growth. However, it is essential for investors to carefully weigh both the potential advantages and risks. Diversifying investments and aligning them with individual risk tolerance is imperative. Engaging in well-informed decision-making can help mitigate risks, ensuring reasonable returns over the long term.
Also Read: Know about Mutual Fund, Features, Types, Pros and Cons of Investing
