Kotak Mutual Fund Files Draft Documents for Two New Index Funds with SEBI
Kotak Mutual Fund has taken a step ahead by filing draft documents and submitted to the SEBI for two of its new index funds i.e. Kotak Nifty Midcap 150 Index Fund and Kotak BSE Sensex Index Fund.
Kotak Nifty Midcap 150 Index Fund
Kotak Nifty Midcap 150 Index Fund is the name of the open-ended scheme proposed to replicate or track the Nifty Midcap 150 Index. The objective of this scheme will be to replicate the returns which are close to the total returns delivered by the securities in the Nifty Midcap 150 Index before taking into consideration all expenses, while at the same time allowing for some tracking error.
It will be benchmarked to the Nifty Midcap 150 Total Return Index (TRI) and compared with its relative performance. Fund managers of this scheme would operate an investment policy of investing between 95% and 100% of investments in equity and allied instruments covered under the Nifty Midcap 150 Index. The balance of 0% to 5% would be invested in debt or money market instruments. Invest in this fund with a minimum amount of Rs.100 and then any further value thereafter.
Investors will be attracted to this fund if they are looking at getting long-term capital growth by the exposure to midcap stocks and earning returns reflecting the Nifty Midcap 150 Index’s performance with tracking errors.
Kotak BSE Sensex Index Fund
Another open-ended scheme is the Kotak BSE Sensex Index Fund which pursues an index-related strategy and tries to replicate the BSE Sensex Index. Similar to the Nifty Midcap, it also aims at return indices concerning the total return of securities represented by the BSE Sensex Index, thereby tolerating tracking errors.
The scheme will aim to benchmark its performance against the BSE Sensex Total Return Index (TRI). The scheme will follow an allotment strategy wherein 95%-100% of the portfolio will be allocated to equities and equity-related securities covered by the BSE Sensex Index, and the balance 0%-5% for debt or money market instruments. Investors can apply with a minimum amount of Rs.100, and there is no limit on subsequent investments.
Kotak BSE Sensex Index Fund is best suited to investors who want capital over the long run on the back of the tracking performance in the BSE Sensex Index which should only be subject to some tracking error.
Conclusion
Both funds present low-cost ways for investors to track the broad markets, minimizing expenses. These options appeal to investors seeking passive strategies for investment.
