SBI Mutual Fund, the country’s largest fund house, has launched a new fund offer of SBI NIFTY-50 Equal Weight Index Fund, an open-ended scheme replicating/ tracking the NIFTY50 Equal Weight Index.

It effectively comes with relatively lower costs as it is a passive offering.

The New Fund Offer will be open for subscription between January 16 and 29.

The investment objective of the scheme is to provide returns that correspond to the total returns of the securities as represented by the underlying index, subject to tracking errors.

Shamsher Singh, Managing Director & CEO, SBI Funds Management, said the new offer is a smart-beta strategy which allocates equal weight to all stocks, instead of considering market cap as the sole criteria.

It suits investors who seek balanced diversification and broad-based growth potential from all the companies based on its parent index, he said.

D.P. Singh, Deputy MD & Joint CEO, SBI Funds Management, said the NFO is an opportunity for those who want to take advantage of the merits of passive investing, while aiming to benefit from diversification and growth across the largest companies in India by market cap and sectors, which steer India’s economy.

The scheme would primarily invest a minimum of 95 per cent and a maximum of 100 per cent of its assets in stocks comprising the NIFTY50 Equal Weight Index, up to 5 per cent in Equity Derivatives or up to 5 per cent in Government securities (like G-Secs, SDLs, treasury bills and other instruments specified by the RBI). The minimum application amount required is Rs 5,000 and in multiples of Re 1 thereafter. Investments can also be done through daily, weekly, monthly, quarterly, semi-annual, and annual SIPs (Systematic Investment Plan).

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