The Indian stock market offers a range of sectoral and thematic funds, but one niche that deserves investor attention is the Ex-Bank Financial Services segment. While banks dominate most financial indices, there’s a lesser-known but high-performing group of companies in the financial services ecosystem that do not include traditional banking operations. This includes companies like CDSL, CAMS, BSE, MCX, and insurance and NBFC players like Bajaj Finance and HDFC Life.
This blog dives into the ICICI Prudential Nifty Financial Services Ex-Bank ETF, a compelling investment option for investors seeking diversification, high-margin platform businesses, and the potential for sustained returns over the long term.
What Is the Ex-Bank Financial Services ETF?
The ICICI Prudential Nifty Financial Services Ex-Bank ETF tracks the Nifty Financial Services Ex-Bank Index, which comprises top financial companies excluding banks. These include:
- Insurance providers (HDFC Life, SBI Life)
- Asset managers and financial infrastructure platforms (CAMS, CDSL, BSE, MCX)
- NBFCs (Bajaj Finance, Bajaj Finserv, Shriram Finance)
- Fintech firms (PB Fintech)
- Other key players like Power Finance Corp and Jio Financial Services
This ETF allows investors to capitalize on India’s growing financial ecosystem without being overexposed to banking volatility or regulation risks.
Performance and Return Potential
As of May 2025, the ICICI Prudential Nifty Financial Services Ex-Bank ETF has delivered impressive short-term returns. Here’s how it compares with a similar fund:
📊 3-Year Returns Comparison
| Fund Name | 1-Year Return | 2-Year Return | 3-Year Return |
|---|---|---|---|
| ICICI Prudential Nifty Financial Services Ex-Bank ETF | 18.94% | 26.65% | N/A (New fund) |
| Motilal Oswal BSE Financials ex Bank 30 Index Fund | 2.88% | 20.92% | N/A (New fund) |
Note: 3-year data is not available for either fund due to their recent launch. Past performance is not indicative of future returns.
Despite being relatively new, both funds have shown strong short-term potential, with the ICICI ETF leading in performance and cost efficiency.
Expense Ratio and Cost Advantage
One of the key benefits of the ICICI Ex-Bank ETF is its low expense ratio of just 0.20%. This makes it an ideal vehicle for long-term SIP investments where costs compound over time. Compare this to many active mid- or small-cap funds which often charge 1–2% expense ratios, and you immediately recognize the cost efficiency of this ETF.
Additionally, with a growing AUM (₹129.15 crore+), the ETF has reasonable liquidity for retail investors.
Why You Should Consider Investing
Here are a few reasons why investors should consider this fund:
- Diversification: You’re not betting on banks but still participating in India’s financial growth.
- Strong Fundamentals: Most companies have little to no debt, high ROE, and strong cash flows.
- Platform Exposure: Unique access to exchange businesses (BSE, MCX), depository services (CDSL), and fintech platforms (CAMS).
- Long-Term Trends: With rising Demat accounts, insurance penetration, and digital transactions, the companies in this index are positioned for secular growth.
How to Invest
The ICICI Prudential Nifty Financial Services Ex-Bank ETF is available on platforms like Zerodha, Groww, and Upstox. Investors can choose to make a lump sum investment or opt for a Systematic Investment Plan (SIP) strategy to average out market volatility.
Before investing, always review the fund factsheet, which you can find on ICICI Mutual Fund’s official site or Moneycontrol’s ETF page.
Final Thoughts
The ICICI Prudential Ex-Bank ETF is ideal for investors who want exposure to high-margin, niche financial companies in India without the cyclicality of banking stocks. With a low expense ratio, strong historical performance, and diversification benefits, this ETF deserves a spot in every modern investor’s portfolio — especially those who believe in India’s long-term fintech and financial infrastructure story.
For more detailed information, you can visit the official pages:
- ICICI Prudential Nifty Financial Services Ex-Bank ETF
- Motilal Oswal BSE Financials ex Bank 30 Index Fund
Tags:
#ExBankETF #ICICIMutualFund #CDSL #MCX #MutualFundsIndia #StockMarketIndia #PassiveInvesting
