Upcoming NFO: Axis Mutual Fund Files Draft for Nifty India Defence Index Fund with SEBI

Axis Mutual Fund has filed draft documents with the regulator for the Axis Nifty India Defence Index Fund, an open-ended scheme that will track the Nifty India Defence Total Return Index (TRI).  

The fund will follow a passive strategy, to replicate index performance before expenses, subject to tracking differences.  

Investment Structure 

The scheme proposes to allocate 95% to 100% of its assets to equities forming part of the Nifty India Defence Index. The balance, up to 5%, will be held in money market instruments or units of debt and liquid funds to manage liquidity.  

It may also take exposure to equity derivatives up to 15% of net assets, mainly for rebalancing or where underlying securities are not readily available. These positions are expected to be temporary.  

Benchmark and Index Details 

The underlying index includes companies linked to the defence sector, selected from the broader market based on free-float market capitalisation. Stocks must derive at least 10% of revenue from defence-related activities to qualify.  

The index typically holds between 10 and 30 stocks and is reviewed periodically. Weight caps are applied to individual constituents to maintain diversification within the index.  

Costs and Investment Terms 

Units will be offered at ₹10 during the new fund offer (NFO) period, with a minimum investment of ₹100. There is no entry load, while an exit load of 0.25% applies if units are redeemed within 15 days of allotment.  

The total expense ratio is capped at 1% as per regulatory limits for index funds. Stamp duty at 0.005% will be levied on transactions, affecting the number of units allotted.  

Risk and Tracking 

The scheme is expected to maintain a tracking error within 2%, although actual deviation may arise due to expenses, cash holdings, or portfolio adjustments.  

Given its sector focus, performance will depend on movements in defence-related stocks, including mid- and small-cap companies, which may see higher volatility and liquidity constraints.  

Read More: Upcoming NFO: Zerodha Fund House Launches Mid-Small Cap Index Fund! 

Conclusion 

The draft outlines a sector-focused index fund with defined allocation, cost limits, and tracking parameters, aligned to the Nifty India Defence TRI. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.   
 
Mutual Fund Investments are subject to market risks, read all the related documents carefully before investing.