The new fund offer or NFO of the scheme is open for subscription and will close on September 26. The scheme will re-open for continuous sale and repurchase from October 3.
The performance of the scheme will be benchmarked against S&P BSE Sensex TRI (Total Return Index). The scheme will be managed by Ekta Gala and Vishal Singh.
The investment objective of the scheme is to generate returns, before expenses, that are commensurate with the performance of the S&P BSE Sensex Total Return Index, subject to tracking error.
The scheme will invest 95-100% in securities included in the S&P BSE Sensex Index, and 0-5% in money market instruments / debt securities, instruments and/or units of debt/liquid schemes of domestic mutual funds.
The investment strategy of the scheme will be to invest in a basket of securities forming part of S&P BSE Sensex Index in similar weight proportion. The investment strategy would revolve around reducing the tracking error to the least possible through regular rebalancing of the portfolio, considering the change in weights of stocks in the index as well as the incremental collections/redemptions in the scheme. A part of the funds may be invested in debt and money market instruments, to meet the liquidity requirements. The minimum application amount will be Rs 5,000 and in multiples of Re 1 thereafter.The scheme is suitable for the investors who are seeking returns that commensurate with performance of S&P BSE Sensex Total Return Index, subject to tracking error over long term and want investments in equity securities covered by S&P BSE Sensex Total Return Index.
Should you invest?
ETMutualFunds always ask investors to invest in an NFO only if it offers something unique – that is, some investment option that is not available in the market or adding something to the existing option.
There are around 10 S&P BSE Sensex ETF schemes in the market, as per ACE MF database. Out of these 10 schemes, Axis S&P BSE Sensex ETF and DSP S&P BSE Sensex ETF are relatively new schemes. The schemes were launched in March and July respectively. Other schemes have a performance record of over five years. ICICI Prudential S&P BSE Sensex ETF, the oldest scheme in the category, gave 13.74% in the five-year horizon.
UTI S&P BSE Sensex ETF, SBI S&P BSE Sensex ETF, and HDFC S&P BSE Sensex ETF offered 13.72% in the same time period. LIC MF S&P BSE Sensex ETF, and Kotak S&P BSE Sensex ETF gave 13.70% and 13.46% respectively. Bandhan S&P BSE Sensex ETF (earlier known as IDFC Sensex ETF) and Aditya Birla Sun Life S&P BSE Sensex ETF offered 13.40% and 12.69% respectively.
S&P BSE Sensex TRI, the benchmark, offered around 13.80% in 10 years. Most schemes have managed to track the benchmark closely, except for Aditya Birla Sun Life S&P BSE Sensex ETF which offered only 12.60% in five years.
