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Product Focus |
11th January 2010 |
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Kotak Nifty ETF |
Sandesh Kirkire, CEO, Kotak Mutual Fund |
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Kotak Mahindra Asset Management Company has launched Kotak Nifty ETF - an exchange traded fund focusing on investing in stocks that comprise the S&P CNX Nifty. The open ended ETF aims to provide returns before expenses that closely correspond to the total returns of the S&P CNX Nifty, subject to tracking errors. The New Fund Offer (NFO) will be open for subscription from January 11, 2010 to January 19, 2010. Speaking about the new fund, Mr. Sandesh Kirkire, Chief Executive Officer, Kotak Mahindra Asset Management Company said, "The addition of Kotak Nifty ETF further strengthens our ETF product suite and reinforces our commitment to provide diverse investment options to cater to the requirement of our investors. Kotak Nifty ETF caters to each and every class of investor- from long term investors to arbitrageurs, institution and FIIs while offering the advantages of - portfolio diversification, - low cost, - trading flexibility and - minimal tracking error". |
Portfolio diversification
The Nifty is a very well diversified broad based index - as can be seen from this pie-chart :
Low Cost
While the offer document puts a cap of 1.5% on the expense ratio, it is more than likely that this scheme will be charged an expense ratio of only around 0.5% - which is the level that Kotak charges for its Sensex ETF and also the level that other Nifty ETFs in the market are at. Effectively, investors can get a well diversified fund at an expense ratio of just 0.5% as opposed to an actively managed fund which would involve an expense of around 2%.
Trading flexibility
The Kotak Nifty ETF offers investors exposure to Nifty with a single order. It is like any other listed share enabling intra day buying and selling. Also with the underlying being similar to Nifty futures, the fund provides hedging and arbitrage possibilities. The minimum investment amount during the New Fund Offer is Rs 10, 000 and in multiples of Rs 1, 000 thereafter. In case of investors opting to switch into the scheme from existing schemes / plan / options of the fund during the NFO period, the minimum amount is Rs 10,000 and in multiples of Re 0.01 thereof.