Zerodha Mutual Fund announced the launch of the Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund, an open-ended passive equity-linked savings scheme with a statutory lock-in period of three years and tax benefit tracking the Nifty LargeMidcap 250 Index.
The scheme opened for public subscription on October 20, 2023, and will close on November 03, 2023.
What kind of mutual fund scheme is this?
This fund aims to invest in stocks that make up the Nifty LargeMidcap 250 Index in a manner that mirrors the index’s composition, with the goal of generating returns on par with the Total Return Index of the Nifty LargeMidcap 250 Index, taking into account potential tracking errors. Additionally, investors can benefit from deductions under Section 80C of the Income-tax Act, 1961, when they invest in this scheme.
What is the main objective of investing in this fund?
The investment objective of the scheme is to generate returns that are commensurate with the performance of the Nifty LargeMidcap 250 Index TRI (underlying Index), subject to tracking error.
However, there can be no assurance or guarantee that the scheme’s investment objective will be achieved.
How may one invest in this scheme?
The scheme shall invest in the following securities as per the limits specified in the asset allocation
table of the scheme, subject to SEBI (Mutual Fund) Regulations. The scheme would invest in stocks constituting the Nifty LargeMidcap 250 Index in a similar proportion (weightage) as in the Index and endeavour to track the benchmark index.
Under normal circumstances, the asset allocation (% of net assets) of the scheme’s portfolio will be as follows:
|
Types of Instruments |
Minimum Allocation (% of Total Assets) |
Maximum Allocation (% of Total Assets) |
Risk Profile |
|
Equities and equity-related securities covered by the Nifty LargeMidcap 250 Index |
95 |
100 |
Very High |
|
Equities and equity-related securities covered by the Nifty LargeMidcap 250 Index |
0 |
5 |
Low to Moderate |
Are there similar mutual funds in the market?
To date, no asset management company (AMC) has launched any such tax-saver index fund that invests in proportion to the securities mentioned in the Nifty LargeMidcap 250 Index Fund.
How will the scheme benchmark its performance?
The performance of the scheme shall be benchmarked to the Nifty LargeMidcap 250 Index TRI. The fund will, in general, invest a significant part of its corpus in equities; the surplus amount of the fund, not exceeding five per cent shall be invested in cash/tri-party repo, repo in corporate debt securities, and money market instruments.
The performance of the scheme may not be commensurate with the performance of the respective benchmark of the schemes on any given day or over any given period. Such variations are commonly referred to as the tracking error. The scheme intends to maintain a low tracking error by effectively replicating the portfolio in line with the index.
Are there any entry or exit loads to this scheme?
This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” would also be“Nil”.
Who will manage this scheme?
Kedarnath Mirajkar is the designated fund manager of this mutual fund scheme.
Does the fund contain any inherent risk?
The scheme involves “Very High Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their principal will be subject to very high risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.
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Updated: 20 Oct 2023, 03:51 PM IST