Kotak Mutual Fund has launched the Kotak BSE Sensex Index Fund, an open-ended scheme designed to replicate or track the performance of the BSE Sensex index.
This new fund offer (NFO) will open for subscription on January 27 and close on February 10, 2025.
Afterward, the scheme will reopen for continued sales and repurchase starting from February 17, 2025.
Investment Objective and Key Features
The primary goal of the Kotak BSE Sensex Index Fund is to provide returns that closely match the total return of the securities in the BSE Sensex index, before deducting any expenses.
The fund will be benchmarked against the BSE Sensex Index (Total Return Index or TRI) and will be managed by Devendra Singhal, Satish Dondapati, and Abhishek Bisen.
Investors can choose between regular and direct plans, with options for growth or Income Distribution Cum Capital Withdrawal (IDCW).
The minimum investment for the NFO is Rs 100, which also applies for Systematic Investment Plan (SIP) purchases.
The fund’s portfolio will mainly consist of 95-100% equity and equity-related securities in the BSE Sensex index, while the remaining 0-5% will be invested in debt or money market instruments.
Expense Ratio and Risk Considerations
The maximum total expense ratio (TER) allowed for this fund is up to 1%, as per regulations. Additionally, the fund will have no exit load for investors.
However, it is important to note that the riskometer shows a “very high risk” for the scheme’s principal.
This scheme is best suited for investors looking for long-term capital appreciation and who are comfortable with tracking the performance of the BSE Sensex Index, understanding that there may be some tracking error.
Investment Strategy and Allocation
The Kotak BSE Sensex Index Fund follows a passive investment strategy.
It will invest in stocks in the same proportions as the BSE Sensex index, aiming to replicate the index’s performance as closely as possible.
The allocation will be 95-100% in equity and equity-related securities covered by the BSE Sensex index, with up to 5% in debt or money market instruments.
