SBI Mutual Fund on Thursday launched the SBI S&P BSE Sensex Index Fund, a passive fund that tracks the S&P BSE Sensex Index.
The scheme's New Fund Offer (NFO) runs from May 18 to May 24, 2023. This open-ended scheme will reopen for investments within five business days from the date of allotment.
The minimum application amount is Rs. 5,000. After that, in multiples of Re. 1. One can invest in the scheme daily, weekly, monthly, quarterly, semi-annually, and annually through a systematic investment plan (SIP). The fund aims to replicate returns corresponding to S&P BSE Sensex TRI.
Moreover, the fund house says the scheme offers an affordable way to invest in the S&P BSE Sensex, which has over a 30-year history, covering more than 40 per cent of BSE's total market cap of the listed universe.
The scheme's investment objective is to replicate the composition of the S&P BSE Sensex Index and generate returns commensurate with the performance of the S&P BSE Sensex Index, subject to tracking errors.
Low-Cost Passive Offering
SBI S&P BSE Sensex Index Fund replicates the composition of the S&P BSE Sensex Index, aiming to generate returns commensurate with its performance. As a passive fund, it offers the advantage of lower management costs by tracking the benchmark index, resulting in fewer short-term trading activities. While it lacks an active fund manager, this passive approach is ideal for investors seeking returns that track the broader market passively at a relatively lower cost.
Says Shamsher Singh, MD & CEO, SBI Funds Management Limited, "Investors, especially first-time equity investors, seeking returns that track the broader market passively at a relatively lower cost to achieve their financial goals, can consider investing in this fund."
Risks
The scheme would invest 95 per cent to 100 per cent of its assets in stocks comprising the S&P BSE Sensex Index. A maximum of 5 per cent will be invested in government securities. Mutual Fund house says that before investing in the fund, investors should know that their principal investment will be at high risk. As 95 per cent of its investments are in equities categorised as high-risk investments, the fund also classifies itself as high-risk.
Who Can Consider Investing?
The fund house says the product is ideal for investors targeting long-term capital appreciation. In addition, it is suitable for individuals seeking passive investment in stocks comprising the S&P BSE Sensex Index in the same proportion as the index to achieve returns equivalent to the index. The fund invests in the same securities as the index, thus giving you the advantage of diversification across all sectors. Says SBI Mutual Funds, "The fund offers the opportunity to invest in 30 largest, most liquid, and financially sound companies across key sectors of the Indian economy."
