Scheme Information Deed Filed With SEBI For Kotak Nifty Midcap 150 Index Fund

Kotak Mutual Fund has recently filed a draft scheme information deed (SID) with the market regulator, the Securities and Exchange Board of India (SEBI) to launch an open-ended scheme replicating/tracking the Nifty Midcap 150 Index, Kotak Nifty Midcap 150 Index Fund. 

Investment Objective

The investment objective of the Kotak Nifty Midcap 150 Index Fund 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 guarantee or assurance that the investment objective of the scheme will be achieved.

Benchmark of Kotak Nifty Midcap 150 Index Fund

Nifty Midcap 150 Index (Total Return Index (TRI) is the benchmark index for the scheme. Nifty Midcap 150 represents the companies ranked 101-250, based on full market capitalisation from Nifty 500. This index intends to measure the performance of mid-market capitalisation companies.

Investment Strategy

The scheme will use a passive investing strategy with stock investments made in the same proportion as the Nifty Midcap 150 Index in order to meet the investment goal. The goal of the investing strategy would be to minimise the tracking error by periodically rebalancing the portfolio while accounting for changes in the weights of the companies in the Index and the incremental contributions made to the Scheme through redemptions or collections. Such rebalancing must be completed within the timeframes that SEBI periodically specifies.

As compared to active fund management, index schemes are less risky because they are passive investments. Because the portfolio tracks the index, its volatility and degree of stock concentration would be the same as the index’s, allowing for tracking error. As a result, actions made by fund managers do not add to the volatility or stock concentration. 

Scheme Suitable for Investors

This scheme is suitable for Investors who are seeking:

• Long-term capital growth
• Return that corresponds to the performance of Nifty Midcap 150 Index subject to tracking error. 

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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.