ICICI Prudential Nifty Auto ETF vs Nippon India Nifty Auto

These two funds, ICICI Prudential Nifty Auto ETF and Nippon India Nifty Auto, are practically mirror images of each other – boasting a 99.7% overlap, ranking them in the top 23% of all fund pairs we’ve analysed (pair_rank 1143 of 5000). This isn’t surprising, as both are passively managed ETFs tracking the Nifty Auto index. The extremely high overlap is driven almost entirely by sector concentration; 76.5% of the overlap comes from the Automobiles sector alone.

The biggest contributors to this near-identical portfolio are large auto players like Mahindra & Mahindra, Maruti Suzuki, and Bajaj Auto – their weights are almost exactly the same in both funds. Essentially, you’re getting the same exposure to the same companies, with minimal deviation. There are no significant holdings unique to either fund.

However, this extreme similarity is a double-edged sword. While it guarantees you’re getting broad exposure to the auto sector, it also means you’re not diversifying. A downturn in the auto industry will impact both funds equally. This high overlap significantly increases your concentration risk.

Given this data, choosing between these two comes down to cost – look at expense ratios and tracking error. There’s little point holding both; you’re duplicating your investment without adding any diversification benefit. Consider if a dedicated auto sector fund aligns with your overall portfolio strategy before investing.