Kotak Mutual Fund has launched a new fund offering (NFO) – the Kotak BSE PSU Index Fund. This index fund aims to provide investors with an opportunity to invest in public sector undertakings (PSUs) by replicating the performance of the BSE PSU Index.
- Fund Name: Kotak BSE PSU Index Fund
- NFO Period: July 10, 2024 to July 26, 2026
- Benchmark Index: BSE PSU Index
- Minimum Investment: ₹1,000 (lump sum)
The primary objective of the Kotak BSE PSU Index Fund is to generate returns that closely correspond to the total returns of the BSE PSU Index, subject to tracking errors. This enables investors to gain exposure to a diversified portfolio of PSUs across various sectors.
1. Stable Revenue Stream: PSUs often have stable revenue streams due to their significant presence in critical sectors like energy, banking, and infrastructure.
2. Government Backing: PSUs benefit from government support, which can provide stability and growth opportunities.
3. Dividend Yields: Many PSUs offer attractive dividend yields, providing a source of regular income.
The fund will follow a passive investment strategy, aiming to replicate the composition and performance of the BSE PSU Index. This involves investing in the same stocks and in similar proportions as the index.
- Equity and Equity-Related Instruments of Companies in the BSE PSU Index: 95-100%
- Debt and Money Market Instruments: 0-5% (for liquidity management)
The Kotak BSE PSU Index Fund NFO is suitable for:
- Investors seeking exposure to India's public sector enterprises.
- Those looking for a stable investment with the potential for regular dividend income.
- Investors with a long-term investment horizon and moderate risk tolerance.
1. Targeted Exposure: Direct exposure to a diversified portfolio of PSUs, which are often market leaders in their respective sectors.
2. Professional Management: Managed by experienced professionals ensuring efficient tracking of the index.
3. Cost Efficiency: As an index fund, it generally has lower expense ratios compared to actively managed funds.
1. Sector Concentration Risk: Being an index fund focused on PSUs, it is exposed to risks specific to public sector enterprises.
2. Market Risk: Investments in equities are subject to market volatility and fluctuations.
3. Tracking Error: There could be slight deviations between the fund’s performance and the benchmark index.
The Kotak BSE PSU Index Fund provides a unique opportunity for investors to capitalise on the growth and stability of India's public sector undertakings. By replicating the BSE PSU Index, this mutual fund investment aims to deliver consistent returns while benefiting from the inherent strengths of PSUs. As always, investors should consider their risk tolerance and investment goals before investing.
For android only