Kotak Mahindra Mutual Fund announced the launch of the Kotak Nifty 200 Momentum 30 Index Fund, an open-ended index scheme that replicates/tracks the Nifty 200 Momentum 30 Index. The new fund aims to track the performance of the top 30 companies within the Nifty 200, selected based on their Normalized Momentum Score.
The scheme opened for public subscription on May 25, 2023, and will close on June 08, 2023. The scheme re-opens for continuous sale and repurchase within five business days from the date of allotment units on or before June 22, 2023.
Q. What kind of mutual fund scheme is this?
This is an open-ended scheme replicating/tracking the Nifty 200 Momentum 30 Index. The Nifty 200 Momentum 30 Index aims to track the performance of the top 30 companies within the Nifty 200, selected based on their Normalized Momentum Score. This Normalized Momentum Score is determined by six-month and 12-month price returns, adjusted for volatility. This selection offers investors exposure to momentum stocks across market capitalizations and diverse sectors.
Q. What is the main objective of investing in this fund?
The investment objective of the scheme is to provide returns that, before expenses, correspond to the total returns of the securities as represented by the underlying index, subject to tracking error. However, there is no assurance that the investment objective of the scheme will be achieved. The scheme does not assure or guarantee any returns.
Q. How may one invest in this scheme?
Investors can invest under the scheme with a minimum investment of ₹5000 per plan/option and in multiples of Re 1. There is no upper limit for investment.
The asset allocation under the scheme, under normal circumstances, will be as follows:
Particulars | Allocation | Risk Profile |
Equity & Equity related Securities covered by Momentum 30 Index | 95 % 100% | Very High |
Debt and Money Market Instruments | 0 % 5% | Low to Moderate |
Q. Are there similar mutual funds in the market?
To date, many asset management companies (AMCs) have launched such momentum-based index funds, thus, allowing inclined investors to avail of returns corresponding to the total returns of the securities in this particular index. These include:
Mutual Fund House | Name of the fund |
Motilal Oswal Mutual Fund | Motilal Oswal Nifty 200 Momentum 30 Index Fund |
Bandhan Mutual Fund | Bandhan Nifty 200 Momentum 30 Index Fund |
ICICI Prudential Mutual Fund | ICICI Prudential Nifty 200 Momentum 30 Index Fund |
UTI Mutual Fund | UTI Nifty200 Momentum 30 Index Fund |
| Source: MoneyControl | |
Q. How will the scheme benchmark its performance?
The performance of Kotak Nifty 200 Momentum 30 Index is benchmarked against the Nifty 200 Momentum 30 Index (Total Return Index). The Nifty 200 Momentum 30 Index which aims to track the performance of the top 30 companies within the Nifty 200 selected based on their Normalized Momentum Score.
The Normalized Momentum Score for each company is determined based on its six-month and 12-month price returns, adjusted for volatility. Stock weights are based on a combination of the stock’s Normalized Momentum Score and its free-float market capitalization.
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?
Devender Singhal, Satish Dondapati and Abhishek Bisen will be the fund managers for the 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.
