Tata Mutual Fund Launches Nifty200 Alpha 30 Index Fund: A New Avenue of Passive Investments
Tata Mutual Fund has launched its new fund, the Tata Nifty 200 Alpha 30 Index Fund. This is an open-ended scheme that shall predominantly invest in securities forming part of the Nifty200 Alpha 30 Index and be managed according to the passive investment strategy, aiming to track the performance of the Nifty200 Alpha 30 Index, subject to tracking error.
The NFO is open for subscription since August 19 and shall close on September 2. Thereafter, the scheme shall be available for continuous sale and repurchase with effect from September 11. The fund would be managed by Kapil Menon and the Nifty200 Alpha 30 Index would be the benchmark preceded by TRI.
This fund tries to replicate the performance of the top 30 such companies from the Nifty200 Index that have a high alpha. Alpha is that extra return that a stock generates as compared to the market return for the associated risk taken into consideration. The fund takes a passive investment style that would try to capitalise on trends that are already happening in the markets and automatically changes the exposure, investing more in outperforming sectors while reducing exposure to underperforming sectors.
A minimum investment of Rs.5,000 can be made with additional investments in multiples of Re 1. The scheme will charge an exit load of 0.25% of the applicable NAV if the investment is redeemed within 15 days from the date of allotment. The maximum TER permitted under Regulation 52 (6) (d) (ii) is up to 1%.
Its strategy is to select those stocks that generate better returns for the amount of risk taken, preferably excess returns for a unit of risk. Chief Business Officer, of Tata Asset Management, Anand Vardarajan says that the approach is designed to capture extra returns beyond what the broader Nifty 200 Index can offer by focusing on the top 30 stocks with strong alpha. This fund takes its place in the fund range of Tata, diversifying its product offerings and offering value to investors’ portfolios.
The scheme shall invest 95-100% in securities included in the Nifty200 Alpha 30 Index, while the remaining 0-5% would be invested in debt and money market instruments, including units of mutual funds. This fund is perfect for investors who are looking to get long-term capital appreciation and are interested in investing in a passively managed fund in companies within the Nifty200 Alpha 30 Index.
It has to be noted that the principal invested in this scheme would have a “very high risk,” according to the riskometer of this scheme. This fund is suitable for those who have a very high-risk profile and are looking to invest their surpluses in a diversified portfolio of high-potential companies.
