All You Need To Know About Kotak BSE Index Fund

Kotak Mutual Fund, one of the leading AMCs in India has filed a draft Scheme Information Deed (SID) with the market regulator, SEBI to launch Kotak BSE Index Fund. This is an open-ended scheme replicating/tracking the BSE Sensex Index. 

Investment Objective

The investment objective of the Kotak BSE Index Fund is to provide returns that, before expenses, correspond to the total returns of the securities as represented by the underlying index, subject to tracking errors. However, there is no guarantee or assurance that the investment objective of the scheme will be achieved.

Investment Strategy

Kotak BSE Index Fund will use a passive investing strategy, allocating the same percentage of its stock portfolio to stocks as the BSE Sensex Index, to meet its investment goal. The goal of the investment strategy would be to minimise the tracking error by rebalancing the portfolio while accounting for changes in the index’s stock weights and incremental redemptions/collections from the Scheme. Such rebalancing must be completed within the timeframes that SEBI from time to time specifies. 

As compared to active fund management, index schemes are less risky because they are passive investments. Because the portfolio tracks the index, its volatility and degree of stock concentration would be the same as the index’s, allowing for tracking error. 

Scheme Suitable for Investors

Kotak BSE Index Fund is suitable for Investors who are seeking:

• Long-term capital growth 
• Return that corresponds to the performance of the BSE Sensex Index subject to tracking error.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.