NFO Alert: New Index Funds by Kotak Mutual Fund: Kotak Mutual Fund has announced the launch of two new index funds. These two funds are Kotak Nifty 50 Equal Weight Index Fund and Kotak Nifty 100 Equal Weight Index Fund. The objective of both these index funds is to track Nifty 50 and Nifty 100 equal weight indices. Both the new fund offers (NFOs) will open for subscription on December 2 and will remain open till December 16, 2024. After this, investors can start regular buying and selling in these funds from December 30. Here we are telling you the basic things related to both the new fund offers, so that it can help you in taking the right decision about investment.
Kotak Nifty 50 Equal Weight Index Fund
This fund is an open-ended equity scheme, which will track the Nifty 50 Equal Weight Total Return Index. 95-100% asset allocation of this fund will be made in stocks and related securities included in Nifty 50 Equal Weight Index. Whereas 0-5% can be invested in debt and money market instruments. Being an index fund, this scheme will follow passive investment strategy. That is, this fund will invest in the shares included in Nifty 50 Equal Weight Index in the same proportion, so that the tracking error can be kept low.
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Kotak Nifty 100 Equal Weight Index Fund
This fund is also an open-ended scheme, which tracks Nifty 100 Equal Weight Total Return Index. This fund will also invest 95-100% in equity and related securities included in the Nifty 100 Equal Weight Index, while 0-5% can be invested in debt and money market instruments. Being an index fund that follows a passive investment strategy, this fund will also keep rebalancing the portfolio as per the index to reduce the tracking error.
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Why are both equal weight index funds special?
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Equal weight index funds will give equal weightage to each stock in the portfolio like its benchmark index, resulting in a more balanced distribution and diversification of the portfolio.
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Being based on passive investment strategy, these funds will be low cost, meaning their expense ratio will be low, which will result in better net returns.
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Since there is not much dependence on any one stock, equal weighting index funds are considered better in terms of risk management.
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Are these NFOs right for you?
If you are looking for a diversified investment option in which investment expenses are low, then these index funds can be a good option. Investing in these can be started with a minimum investment of just Rs 100. Therefore, it is easy for new and small investors to invest in them. But before investing, you must understand your risk appetite, because being equity index funds, they will be greatly affected by stock market fluctuations.
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Important information about both NFOs
1. Kotak Nifty 50 Equal Weight Index Fund.
2. Kotak Nifty 100 Equal Weight Index Fund
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Subscription date: 2 December to 16 December 2024.
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Minimum investment: Rs 100.
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Benchmark of funds: Nifty 50 Equal Weight Index (TRI), Nifty 100 Equal Weight Index (TRI)
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Investment Options: Lumpsum and SIP
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Fund Managers: Devendra Singal, Satish Dondapati and Abhishek Bisen
(Disclaimer: The purpose of this article is only to provide information and not to give advice on investing in any scheme. Take investment related decisions only after taking the advice of your investment advisor.)
