SBI Mutual Fund, the largest fund house in India, has launched an open-ended scheme called the SBI Nifty IT Index Fund.
This fund is designed to track the performance of the Nifty IT Index, offering investors a chance to tap into the IT sector.
The New Fund Offer (NFO) period runs from 4 February to 17 February 2025, making it an ideal time for investors interested in the technology space to participate.
Key Features of the Fund
Investment Objective
The primary goal of the fund is to mirror the returns of the Nifty IT Index. However, investors should note that there may be tracking errors, and returns are not guaranteed.
Investment Allocation
1) 95% to 100% of the fund is invested in stocks listed under the Nifty IT Index.
2) The remaining 5% is allocated to other instruments like Government Securities (G-Secs), State Development Loans (SDLs), Treasury Bills, tri-party repos, and liquid mutual fund units.
Benchmark
The fund’s performance is compared to the Nifty IT TRI Index. The trustees may update this benchmark if better alternatives arise due to market changes.
Investment Details and Strategy
Minimum Investment and SIP Options
During the NFO: Minimum investment starts at ₹5,000, with additional investments in multiples of ₹1.
Switching from another SBI Mutual Fund: Minimum remains ₹5,000.
Continuous investments: Same ₹5,000 minimum, followed by multiples of ₹1.
For Systematic Investment Plans (SIPs), investors can choose from daily, weekly, monthly, quarterly, semi-annual, or annual options.
Exit Load
1) A 0.25% exit load applies if the scheme is exited within 15 days of allotment.
2) No exit load is charged after 15 days. (Note: Exit load terms may change in the future.)
Passive Investment Approach
The fund follows a passive strategy, replicating the Nifty IT Index rather than trying to outperform it.
This eliminates risks associated with active management, such as stock-picking errors.
Portfolio and Derivative Exposure
Rebalancing: The portfolio is adjusted within 7 days if there are changes in the Nifty IT Index composition.
Derivatives: The scheme may use derivatives for non-hedging purposes, which carry higher risks and potential losses despite offering high profit opportunities.
Fund Manager
The fund is managed by Harsh Sethi, a seasoned professional with SBI Mutual Fund since May 2007.
He also manages other large passive funds like the SBI Nifty IT ETF, SBI Nifty Consumption ETF, and SBI Nifty Private Bank ETF.