Kotak Mahindra Mutual Fund announced the launch of Kotak Nifty Smallcap 50 Index Fund, an open-ended index fund scheme tracking the Nifty Smallcap 50 Index constituents.
The scheme opened for public subscription on March 16, 2023, and will close on March 29, 2023. The scheme re-opens for continuous sale and repurchase within five business days from the date of allotment of units on or before April 18, 2023.
Q. What kind of mutual fund schemes is this?
This open-ended index fund scheme tracks the Nifty Smallcap 50 Index. The fund is best for investors who are seeking:
- Long-term capital appreciation
- Investment in stocks comprising the underlying index and endeavours to track the benchmark index, subject to tracking errors.
However, there is no assurance that the scheme’s investment objective will be realized.
Q. What is the main objective of investing in this fund?
The investment objective of the scheme is to replicate the composition of the Nifty Smallcap 50 Index and to generate returns that are commensurate with the performance of the Nifty Smallcap 50 Index, subject to tracking errors. The scheme does not assure or guarantee any returns.
Q. How may one invest in this fund?
Investors can invest under the scheme with a minimum investment of ₹5000 per plan/option and in multiples of Re 1, thereafter. There is no upper limit for investment.
The scheme offers two plans as follows:
- Regular Plan
- Direct Plan
The portfolio of both plans will be unsegregated.
Under normal circumstances, the asset allocation of the scheme will be as follows:
| Instruments | Allocation | Risk Profile |
| Equity and Equity related securities covered by the Nifty Smallcap 50 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 index funds, thus, allowing inclined investors to avail of returns corresponding with the total returns of the securities in this particular index. These include:
| Name of the fund | Yield to Maturity (in %) |
| Motilal Oswal Nifty Smallcap 250 Index Fund | -6.63 |
| SBI Nifty Smallcap 250 Index Fund | -6.70 |
| Edelweiss Nifty Smallcap 250 Index Fund | -6.71 |
| Source: MoneyControl | |
Q. How will the scheme benchmark its performance?
The performance of the scheme is measured against Nifty Smallcap 50 Index TRI. As the Scheme is an index scheme and would invest in securities constituting Nifty Smallcap 50 Index TRI, the said index is an appropriate benchmark for 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” will also be “Zero”.
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 extreme risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.
