The minimum investment amount is Rs. 5,000 and in multiples of Re 1. The new fund will track the S&P BSE Sensex TRI benchmark and endeavour to generate alpha by investing in domestic equity ETFs based on the fund manager’s top down investment view.
ETFs are soon becoming one of the most popular vehicles of investing in passive strategies as they replicate the portfolio of the underlying index while trading in bite sized units on an exchange at market determined prices.
The investment objective of the Axis S&P BSE Sensex ETF is to provide returns before expenses that correspond to the total returns of the S&P BSE Sensex TRI Index subject to tracking errors.
According to the fund house, the Scheme endeavours to invest in stocks forming part of the underlying index in the same ratio as per the index to the extent possible. Essentially, 95% to 100% of the investments will be made in equity instruments covered by S&P BSE Sensex TRI and the remaining in Debt and Money Market investments. To that extent follows a passive investment strategy, except to the extent of meeting liquidity and expense requirements.
As the scheme aims to invest and maintain domestic ETF exposure greater than 95% of net assets at all times, the resulting tax treatment will be that of equity mutual funds. Given the mutual fund structure, investors can look to invest through various systematic options like SIPs, STP’s & lumpsum investments.
Some Key Attributes of the Fund include:
Low cost passive investment solution: A hassle-free solution for investors looking for a low cost equity product
Elimination of bias: As the fund invests in the underlying index, it eliminates fund manager bias while purchasing/selling securities
Equity taxation: As all investments will be made in Equity instruments covered by S&P BSE Sensex TRI, the scheme is subject to Equity taxation
Endeavour for minimal tracking error: The passively managed fund endeavours for minimal tracking error as it aims to replicate the benchmark
Chandresh Nigam, MD & CEO, Axis AMC, said, “Passive investing’s efficient low cost strategies that focus on tracking a specific index while relying on the broader market wisdom, have been some of the major reasons for its increased importance amongst the investors. With the launch of the Axis S&P BSE Sensex ETF, we are aiming to create a low friction investment strategy that relies on broader market wisdom coupled with our principle of ‘quality & growth’ philosophy to yield wealth creation opportunities for investors.”
The New Fund Offer (NFO) is open for subscription and will close on March 15.