NFO Alert: Kotak Mahindra Mutual Fund launches Kotak S&P BSE Housing Index Fund; all you need to know

Kotak Mahindra Mutual Fund announced the launch of the Kotak S&P BSE Housing Index Fund, an open-ended scheme replicating/tracking the S&P BSE Housing Index.

The scheme opened for public subscription on August 07, 2023, and will close on August 21, 2023. The scheme re-opens for continuous sale and repurchase within five business days from the date of allotment units on or before September 04, 2023.

What kind of mutual fund scheme is this?

This is an open-ended index fund replicating/ tracking the S&P BSE Housing Total Return Index (TRI).

Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company said, “At Kotak Mutual Fund, our relentless pursuit is to offer our investors a wide array of investment solutions. The introduction of the Kotak S&P BSE Housing Index Fund exemplifies our dedication to providing products that cater to diverse risk appetites and investment horizons. This fund presents a unique opportunity for investors looking to capitalize on the potential growth in the housing sector and businesses that can benefit from the real estate boom. By launching this thematic index fund, we bolster our range of passive fund offerings, enhancing our overall portfolio of investment options.”

What is the main objective of investing in this fund?

The investment objective of the scheme is to replicate the composition of the S&P BSE Housing Index and to generate returns that are commensurate with the performance of the S&P BSE Housing Index, subject to tracking errors. However, there is no assurance that the objective of the scheme will be realized. The scheme does not assure or guarantee any returns.

Devender Singhal, EVP & Fund Manager, Kotak Mahindra Asset Management Company said, “The launch of the Kotak S&P BSE Housing Index Fund is in harmony with our steadfast dedication to providing a range of products tailored to suit various risk appetites and investment timeframes. This fund aims to present a compelling prospect for investors seeking to capitalize on the housing sector and enterprises that stand to benefit from the expansion in the real estate domain potentially. By introducing this thematic index fund, we intend to fortify our comprehensive array of passive fund offerings, thus bestowing upon investors a multitude of empowering opportunities.”

How may one invest in this scheme?

Investors can invest under the scheme with a minimum investment of Rs 5000 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:

Are there similar mutual funds in the market?

To date, some asset management companies (AMCs) have launched funds in this category. You may view the list as under:

How will the scheme benchmark its performance?

The performance of the scheme is measured against S&P BSE Housing Index (Total Return Index). The S&P BSE Housing Index measures the performance of common stocks within the S&P BSE 250 Large Mid Cap Index classified as part of the eligible common India industry. The constituents are weighted by float-adjusted market capitalization, subject to a single constituent weight cap of five per cent.

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”.

Who will manage this scheme?

Devender Singhal and Satish Dondapati will be the fund managers for the scheme. Abhishek Bisen will be the fund manager for debt securities in the scheme.

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.