Edelweiss to Introduce BSE Capital Markets & Insurance ETF

Edelweiss Mutual Fund is to launch the Edelweiss BSE Capital Markets & Insurance ETF, an open-ended exchange-traded scheme. This ETF aims to replicate or track the performance of the BSE Capital Markets & Insurance Total Return Index (TRI), offering investors a vehicle to align their investments with this specific market segment.

Details About the Scheme

• Objective: The goal of this scheme is to generate returns that closely correspond to the performance of the BSE Capital Markets & Insurance TRI, accounting for minor tracking errors.
• Benchmark: The ETF will use the BSE Capital Markets & Insurance TRI as its benchmark.
• Minimum Investment: The initial investment required is ₹5,000, with subsequent investments allowed in multiples of ₹1.
• Fund Manager: Bhavesh Jain, a professional with over 16 years in equity markets, will manage the scheme.

Structure & Strategy

The Edelweiss BSE Capital Markets & Insurance ETF adopts a passive investment strategy, closely mirroring its underlying index. This method ensures the fund does not attempt to outperform the index but instead focuses on matching its performance. The fund’s structure involves an allocation (95%-100%) to securities represented in the index, with a smaller portion (up to 5%) potentially invested in money market instruments for liquidity.

Investment Process & Liquidity

Investors can participate during the New Fund Offer (NFO) period or trade units on stock exchanges like NSE and BSE post-listing. Units will be priced at 1/100th of the closing value of the underlying index during the NFO, with subsequent pricing showing dynamics. The ETF allows direct redemption of units in specified creation sizes through the fund or regular trading in smaller denominations on exchanges.

Considerations for Investors

While the ETF aims to provide long-term capital appreciation, potential investors should note:

• Tracking Error: Factors such as market conditions, liquidity, and operational costs may cause minor deviations from the index performance.
• Risk Level: The scheme is categorized under the “Very High Risk” category in the Risk-o-meter.

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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.