LIC Mutual Fund launches the Nifty Midcap 100 ETF, a passive fund to mirror the Nifty Midcap 100 Total Return Index's performance.
LIC Mutual Fund Asset Management Limited has launched a New Fund Offer (NFO) of LIC MF Nifty Midcap 100 ETF. NFO runs from February 8 to February 12, 2024, with reopening scheduled for February 19, 2024. The fund aims to mirror the performance of the Nifty Midcap 100 Total Return Index. This ETF benchmarked against the Nifty Midcap 100 Total Return Index, represents approximately 12 per cent of the free float market capitalisation of NSE-listed stocks as of September 29, 2023.
The scheme's investment objective is to provide returns that closely correspond to the total returns of securities as represented by benchmark, subject to tracking errors. The NFO allows a minimum investment of Rs. 5000, with subsequent investments in multiples of Re. 1. Entry loads and exit loads are not applicable.
ETFs are passively investing funds that invest in a bunch of stocks, bonds, derivatives and traded on the stock exchange. They also follow a benchmark index trying to replicate its performance. Essentially they behave like a mutual fund because it collects money from different investors. But it also has the characteristics of a stock because it is traded on the stock exchange and its price fluctuates during trading hours. So to invest in ETFs, you need to have a demat account. But fund houses now allow investors to invest in ETFs through the fund-of-fund route.
LIC MF Nifty Midcap 100 ETF will allocate at least 95 per cent of its assets to securities from the Nifty Midcap 100 Total Return Index, in a passive investment approach. In passive investing, low cost as compared to actively managed mutual fund schemes is an advantage.
Ravi Kumar Jha, Managing Director, and CEO of LIC Mutual Fund Asset Management Limited said, "Given the prevailing macro environment, we feel we are launching the Fund at the right time. As per the International Monetary Fund Report, the growth in India is projected to remain strong in the upcoming years. Additionally, the Centre's positive outlook on high GDP growth rate and reduced market borrowing plan may bode well with the financial markets."