ICICI Prudential Nifty Auto ETF vs TATA NIFTY AUTO INDEX FUND

These two funds, ICICI Prudential Nifty Auto ETF and TATA Nifty Auto Index Fund, are practically mirror images of each other – boasting a 99.92% overlap, ranking them in the top 8% of all fund pairs we’ve analysed (pair_rank 388 of 5000). This isn’t surprising, as both are passively managed funds tracking the Nifty Auto index. The extremely high overlap is driven by a concentrated sector focus – automobiles account for 76.67% of the shared portfolio.

The biggest contributors to this near-identical portfolio are the auto sector giants: Mahindra & Mahindra, Maruti Suzuki, and Bajaj Auto. Weights are almost exactly the same across both funds for these key holdings, explaining the massive overlap contribution. Frankly, there’s very little difference within the portfolios themselves. Both funds hold the same 15 stocks, and neither has any significant unique holdings.

However, the difference lies with who is managing the fund – ICICI vs. Tata AMC. While tracking the same index, expense ratios and tracking error (how closely the fund follows the index) will vary. These subtle differences, though, don’t justify holding both.

A 99.92% overlap is a red flag for diversification. You’re essentially doubling down on the same bets. If you already hold one Nifty Auto fund, adding the other provides almost no additional diversification benefit. Consider if your portfolio needs another auto-focused fund, or if broader market exposure would be more prudent.