Axis Mutual Fund rolled out its new fund offer (NFO) for Axis Nifty Small Cap 50 Index Fund on February 21. The NFO will remain open till March 7.
The fund invites investors who are seeking long term wealth creation solution as it is an index fund that seeks to track returns by investing in a basket of Nifty Small Cap 50 index stocks and aims to achieve returns, subject to tracking error.
The scheme will follow Nifty small cap 50 TRI index. The minimum initial investment amount during the NFO period would be ₹5,000 and in multiples of Re 1 thereafter
The key features of fund include the following:
A. The fund represents the top 50 stocks from the Nifty Small Cap 250 index based on defined criteria.
B. The fund will select the most liquid small caps by average daily turnover over a six-month period.
C. The fund promises to assign higher weights to companies with larger float.
D. To maintain fund performance, the fund will exclude securities if stock falls below the 130th rank based on full market capitalisatiion.
Investment strategy
The scheme would invest in stocks comprising the underlying index and will track the benchmark index. However, the scheme may also invest in debt and money market instruments to meet liquidity and expense requirements.
It will invest in stocks forming part of the underlying in the same ratio as per the index to the extent possible and to that extent follows a passive investment strategy.
Some unusual events such as the constituent stocks becoming illiquid in cash market, the exchange changing the constituents, among other factors can increase the tracking error. In these events, it may be more prudent for the scheme to take exposure through derivatives of the index itself or its constituent stocks to minimize the long-term tracking error
Securities covered by Nifty small cap 50 index in the scheme will be anywhere between 95 to 100 percent, whereas debt and money market instruments would comprise anywhere between 0 to 5 percent.
The scheme also promises to manage risk in order to keep it in line with its investment objective. The risk control process involves identifying as well as measuring the risk through an array of risk measurement tools