Kotak Mahindra AMC Launches India’s First MSCI India ETF: A Gateway to Market Growth
Kotak Mahindra Asset Management Company, Inc. launched India’s first exchange-traded fund, branded the Kotak MSCI India ETF, to track the MSCI India Index. It is an open-ended scheme opened for public subscription on January 29, 2025, and it will close on February 12, 2025 under its new fund offering (NFO). The scheme is likely to reopen for continuous trading on or before February 27, 2025.
A New Investment Avenue for Domestic and Global Investors
The Kotak MSCI India ETF is an index fund that follows a passive investment strategy, replicating the composition of the MSCI India Index (Total Return Index – TRI). The scheme aims to generate returns in line with the benchmark index by investing in stocks in the same proportion as the index. The investment approach focuses on minimizing tracking errors by rebalancing the portfolio based on changes in stock weights and new investor inflows or redemptions.
To cater to international investors, Kotak International, the global business division of Kotak Group, has launched a separate fund Kotak MSCI India ETF Fund, which will invest in the same benchmark. This expansion aligns with the company’s vision of providing innovative investment solutions to both domestic and global investors who seek exposure to India’s growing economy.
Investment Strategy and Risk Profile
The Scheme Information Document (SID) classifies the Kotak MSCI India ETF as a very high-risk investment. This ETF is for investors looking at long-term capital appreciation, who wish to invest in large- and mid-cap companies that drive India’s economic growth.
The fund managers, Devender Singhal and Abhishek Bisen, will manage the portfolio to track the MSCI India Index closely; however, they can keep the tracking errors in control. The fund is designed to provide exposure to a broad range of companies that contribute significantly to India’s economy.
Subscription Details and Charges
The minimum application amount during the NFO is slated at Rs.5,000 where investors are obligated to pay in Rs.10 per unit during the initial subscription phase. After the NFO, units can be bought or sold on stock exchanges where the ETF is listed. The market makers, institutional investors, and retail participants get the exposure.
As per the SID, the scheme does not attract any entry or exit load, thus being a cost-effective investment avenue for participants. The ETF is designed for investors who seek an investment vehicle aligned with India’s long-term economic growth potential.
With the launch of the Kotak MSCI India ETF, Kotak Mahindra AMC becomes the first Indian fund house to partner with MSCI for such a product. This Kotak MSCI India ETF seeks to provide a structured, diversified approach for investors looking to take advantage of the restructuring economic landscape of India. Thus, the effort was aligned with providing investment products fitting diverse risk appetites and investment horizons to position the company as an innovator in the financial markets.
