Draft Filed with SEBI: Edelweiss BSE Internet Economy ETF Set to Tap into India’s Digital Growth

Edelweiss Mutual Fund has recently filed a draft with the Securities and Exchange Board of India (SEBI) to launch the Edelweiss BSE Internet Economy ETF. This proposed open-ended exchange-traded fund aims to replicate the performance of the BSE Internet Economy Total Return Index. Below is a detailed overview of the scheme’s key features, investment objectives, asset allocation, fund management, associated risks, and other pertinent information.

Scheme Overview

• Scheme Name: Edelweiss BSE Internet Economy ETF
• Category: Exchange Traded Fund (ETF)
• Type: Open-ended scheme tracking the BSE Internet Economy TRI

Investment Objective

The primary goal of the scheme is to generate returns that closely correspond to the performance of the BSE Internet Economy Total Return Index, subject to tracking errors. As a passively managed fund, it seeks to mirror the index’s performance rather than outperform it.

Asset Allocation

The fund’s proposed asset allocation is as follows:

• Securities covered by the BSE Internet Economy Index: 95% – 100%
• Money Market Instruments, cash, and cash equivalents, and/or units of liquid schemes: 0% – 5%

This allocation strategy ensures that the majority of investments are aligned with the internet economy sector, while maintaining a minimal cash component for liquidity purposes.

Fund Management

• Fund Manager: Bhavesh Jain

With extensive experience in the equity market, Bhavesh Jain will oversee the management of this ETF, focusing on closely replicating the index and maintaining alignment with its performance.

Risks Associated with the Scheme

The scheme is associated with a “Very High” risk level, making it suitable for investors with a high-risk tolerance seeking long-term capital growth. Key risks include:

• Market Risk: Fluctuations in stock prices within the internet sector.
• Tracking Error: Potential divergence in performance from the underlying index due to various operational factors.
• Sector-Specific Risk: Concentration in the internet economy sector, which may face rapid changes or regulatory challenges.

Key Details for Investors

• Net Asset Value (NAV) Disclosure: The fund’s NAV will be disclosed daily on the Edelweiss Mutual Fund website and the Association of Mutual Funds in India (AMFI) platform.
• Exit Load: No exit load is applicable.
• Minimum Investment Amount: Rs. 5,000 during the New Fund Offer (NFO) period; subsequent investments in multiples of Re. 1, with no upper limit.
• Listing: The fund is expected to be listed on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) to facilitate ease of trading.

Benchmark

The BSE Internet Economy TRI serves as the benchmark for this ETF, chosen for its alignment with the fund’s objective of tracking the performance of internet economy-related stocks.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.