ICICI Prudential Nifty Metal ETF is a special type of investment fund that focuses on companies in the metal industry.
This fund is managed by ICICI Prudential Mutual Fund, a trusted name in the investment world.
It officially started on August 14, 2024.
Since it’s an ETF (Exchange-Traded Fund), you can buy and sell it on the stock exchange, just like shares of a company.
The value of the ETF goes up or down based on how the metal companies in the NIFTY Metal Index perform.
What is the goal of this fund?
The main aim of this fund is to give you returns that match the performance of the NIFTY Metal Total Return Index.
In simple terms, the fund tries to grow your money in the same way the metal industry grows.
However, there may be small differences between the index returns and your actual returns due to things like fund management costs or slight delays in adjusting the portfolio.
These small differences are called tracking errors.
If the metal sector performs well, your investment is likely to grow.
But if the sector struggles, your investment value might fall.
So, it’s important to understand that this fund is directly tied to the ups and downs of the metal market.
Where does the fund invest your money?
The fund’s investments are carefully chosen to match the NIFTY Metal Index.
How money is distributed:
100% in stocks (equities):
The fund invests entirely in shares of metal companies. It doesn’t keep money in cash or bonds.
Top 10 companies hold most of the money:
Around 90.88% of the fund’s value comes from just the top 10 companies in the index.
This means the fund relies heavily on the performance of these big players.
Focus on metal sectors:
The fund focuses only on companies involved in the metal industry — like steel, aluminum, and mining companies.
Investing in companies of all sizes:
The fund can invest in large-cap, mid-cap, and small-cap companies, though at launch, it seems to be fully focused on bigger companies that dominate the industry.
By spreading investments across multiple companies in the metal sector, the fund reduces the risk of relying on just one or two companies, but it still remains tied to the overall performance of the metal industry.
Tax rules for this ETF
When you invest in this fund, you should know how taxes work so you can plan your investments wisely.
Here is a simple breakdown:
If you sell your investment within 1 year:
Any profit you make will be taxed at 15%.
This tax is called Short-term Capital Gains Tax (STCG).
If you sell your investment after 1 year:
Profits up to ₹1 lakh per year are tax-free.
Profits above ₹1 lakh are taxed at 10%.
This tax is called Long-term Capital Gains Tax (LTCG).
For example, if you make a profit of ₹1.5 lakh after 1 year, you’ll pay 10% tax on ₹50,000 (the amount above ₹1 lakh).
Is this fund right for you?
This ETF might be a good choice if you:
Believe in the future of the metal industry and expect it to grow.
Want to invest in a specific sector instead of the entire stock market.
Prefer a hands-off approach, where the fund automatically tracks the NIFTY Metal Index.
Can handle market ups and downs, since metal stocks can be volatile (their prices can change a lot in a short time).
However, if you prefer a more stable, less risky investment, or if you’re not sure about the future of the metal sector, you might want to consider a more diversified fund instead.
The ICICI Prudential Nifty Metal ETF gives you an easy way to invest in India’s top metal companies.
It aims to grow your money like the NIFTY Metal Index, but your returns can go up or down depending on how the metal sector performs.
If you hold your investment for more than a year, you get tax benefits — and as long as you understand the risks of investing in a single sector, this ETF can be a great way to build long-term wealth.