Tata AIA Life Insurance has introduced two new funds, the Tata AIA Sector Leaders Index Fund and the Tata AIA Sector Leaders Index Pension Fund, which will invest in India’s largest companies across various sectors. These funds are based on the BSE India Sector Leaders Customised Index and will be available at an initial price of ₹10 per unit during the New Fund Offer (NFO) period, which ends on September 22.
The key features of these funds include a benchmark of the BSE India Sector Leaders Customised Index, asset allocation of 80-100% in equity and equity-related instruments, and up to 20% in cash and money market instruments. The funds will cover up to three of the largest companies from each sector in the top 500 list, currently exposing investors to 61 companies across 21 industries. The index fund will be offered through unit-linked insurance plans (ULIPs), while the pension fund variant will be linked to ULIP-based retirement solutions.
The investment approach of these funds aims to provide diversified equity exposure by focusing on sector leaders, reducing concentration risk while participating in the performance of large, established businesses. Historically, Tata AIA’s equity-oriented funds have delivered higher-than-benchmark returns, with annualized returns ranging between 27% and 29% over the past five years, compared to benchmark returns of about 19%. However, past performance does not guarantee future results.
Investors should consider that these funds combine equity investment with life insurance cover, given their ULIP structure. Returns are market-linked and subject to volatility, making them more suitable for long-term objectives such as retirement planning rather than short-term gains. Financial advisers recommend aligning these products with long-term goals, and investors should note that fund charges under these products will not attract GST from September 22, in line with the new tax framework. Overall, the Tata AIA Sector Leaders Index Fund and the Tata AIA Sector Leaders Index Pension Fund offer a new investment opportunity for those looking to diversify their equity exposure and participate in the growth of India’s largest companies.