HDFC Mutual Fund announced the launch of the HDFC S&P BSE 500 Index Fund, an open-ended index fund tracking theS&P BSE 500 Index (TRI) constituents.
The scheme opened for public subscription on April 06, 2023, and will close on April 18, 2023, and will re-open for ongoing subscription and redemption within five business days from the date of allotment of units.
Q. What kind of mutual fund scheme is this?
This is a kind of open-ended index fund investing in the top 500 constituents in the S&P BSE AllCap. This fund scheme is a broad representation of the Indian market.
Q. What is the main objective of investing in this fund?
The scheme's investment objective is to generate commensurate returns (before fees and expenses) with the S&P BSE 500 Index TRI (Underlying Index) performance, subject to tracking error.
Q. 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 the scheme will be as follows:
| Instruments | Indicative Allocations (% of total assets) | Risk Profile | |
| Minimum | Maximum | High/Medium/Low | |
| Securities covered by S&P BSE 500 Index | 95 | 100 | Very High |
| Debt Securities & Money Market Instruments, units of Debt Schemes of Mutual Funds | 0 | 5 | Low to Medium |
Q. Are there similar mutual funds in the market?
To date, many asset management companies (AMCs) have launched such Sensed index funds, thus, allowing inclined investors to avail of returns corresponding to the total returns of the securities in this particular index. These include:
| Name of the fund | Three-year returns (in %) | Five-year returns (in %) |
| LIC MF S&P BSE Sensex Index Fund | 30.14 | 12.01 |
| Nippon India Index Fund - Direct Plan - S&P BSE Sensex Plan | 30.07 | 13.13 |
| ICICI Prudential S&P BSE Sensex Index Fund | 30.07 | 13.08 |
| Tata S&P BSE Sensex Index Fund | 29.56 | 13.05 |
| Source: MoneyControl | ||
Q. How will the scheme benchmark its performance?
The performance of the scheme will be benchmarked against the S&P BSE 500 index, which is designed to be a broad representation of the Indian market. Consisting of the top 500 companies listed at BSE Ltd, the index covers all major industries in the Indian economy. The benchmark is created in a way that it is most suited for comparing the performance of the scheme.
Q. 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” is also “Nil”.
Q. Who will manage this scheme?
Nirman Morakhia and Arjun Agarwal would be the designated fund managers of this scheme.
Q. Does the fund contain any inherent risk?
The scheme involves “Very High Risk” as per the details mentioned in the Scheme 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.
