NFO Alert: Kotak Mahindra Mutual Fund launches Kotak BSE PSU Index Fund; all you need to know

Kotak Mahindra Mutual Fund announced the launch of the Kotak BSE PSU Index Fund, an open-ended scheme replicating/tracking the BSE PSU Index.

The scheme opened for public subscription on July 10, 2024, and will close on July 24, 2024. The scheme re-opens for continuous sale and repurchase on or before August 06, 2024.

What kind of mutual fund scheme is this?

This is an open-ended scheme replicating/tracking the BSE PSU Index. This product is suitable for investors who are seeking:

• Long-term capital growth
• Return that corresponds to the performance of the BSE PSU Index subject to tracking error.

Nilesh Shah, Managing Director, KMAMC, commented on the launch, “At Kotak Mutual Fund, we continually strive to provide our investors with diverse investment solutions. The launch of the Kotak BSE PSU Index Fund is aligned with our commitment to offer products that cater to different risk appetites and investment horizons. While PSU stocks present a mixed landscape with varying opportunities across sectors, this index fund allows investors to gain broad exposure to the PSU segment. This fund provides a structured approach to PSU investing, allowing investors to participate in the potential of this segment passively while managing risks through diversification.”

What is the main objective of investing in this fund?

The investment objective of the scheme is to provide returns that, before expenses, correspond to the total returns of the securities as represented by the underlying index, subject to tracking errors. However, there is no assurance that the objective of the scheme will be achieved.

Devender Singhal, Executive Vice President & Fund Manager, Kotak Mahindra AMC added, “The Kotak BSE PSU Index Fund represents an important addition to our product lineup, catering to investors interested in India’s public sector enterprises. PSUs play a crucial role in key sectors of our economy, from energy and finance to defense and infrastructure. While individual PSU stocks may exhibit varying performance, this index-based approach allows investors to potentially benefit from the overall growth and reforms in the public sector. As India continues its economic trajectory, this fund offers investors a chance to be part of that journey through a comparatively cost-effective and systematically managed investment vehicle.”

How may one invest in this scheme?

Investors can invest under the scheme with a minimum investment of ₹100 per plan/option and in multiples of Re 1. There is no upper limit for investment.

Under normal circumstances, the asset allocation (% of net assets) of the scheme’s investment portfolio will be as follows:

Are there similar mutual funds in the market?

To date, no asset management company (AMC) has launched any such mutual fund scheme in this category.

How will the scheme benchmark its performance?

The performance of the scheme is measured against the BSE PSU Index (Total Return Index). The BSE PSU Index is designed to measure the performance of public sector undertakings. The composition of the aforesaid benchmark is such that, it is most suited for comparing the performance of the scheme.

Are there any entry or exit loads to this scheme?

This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” would be calculated as “Nil”.

Who will manage this scheme?

Devender Singhal and Satish Dondapati will be the designated fund managers for the scheme. Abhishek Bisen will be the fund manager for debt securities of the scheme.

Does the fund contain any inherent risk?

The scheme involves “Very High Risk” as per the details mentioned in theScheme Information Document and is best suited to investors willing to understand that their principal will be subject to very high risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.