IIFL Mutual Fund announces its new offering of an open-ended Index Fund—IIFL Dividend Opportunities Index Fund (‘Scheme’). A passively managed open-ended index fund, IIFL Dividend Opportunities Index Fund is the second equity Scheme launched by India Infoline Asset Management Company; the first being IIFL Nifty ETF launched in September 2011.
 
The Scheme will invest in stocks which are constituents of CNX Dividend Opportunities Index (Dividend Index) in the same proportion (weightage) as in the index and track the benchmark index. A thematic index, the CNX Dividend Opportunities Index provides exposure to 50 high yielding companies listed on NSE (National Stock Exchange) while meeting stability and tradability requirements. The Dividend Index comprises stocks of large and mid-cap companies spread across 25 diversified sectors. Similarly, the Scheme would invest in large and mid-cap companies.
 
The CNX Dividend Index, owned and maintained by India Index Services & Products Ltd (IISL),  has outperformed* other key representative indices like S&P CNX Nifty, CNX 100 and CNX Mid-cap (*Dividend Index Base rate–October, 2007).
 
R Venkataraman, Managing Director, IIFL Group, says, “The Scheme will track and replicate the constituents of CNX Dividend Opportunities Index which is based on four broad parameters—dividend, liquidity, market cap and profitability. At present, the CNX Dividend Index is one of the best indices and has outperformed in difficult market conditions.”
 
Gopinath Natarajan, CEO, IIFL AMC, says, “The IIFL Dividend Opportunities Index Fund is good for those investors who aim to reap benefits from high dividend yield, cash flow generating companies, which share their profits by way of dividend. The Scheme is not only suited for investors looking for tactical allocation but also to investors looking at potential long-term gains.”
 
The new fund offer opens on June 6, 2012 and closes on June 19, 2012. The minimum application amount is Rs. 5,000. The minimum application amount for systematic investment plan (SIP) is Rs. 1,000 per month for a minimum period of six months. Under the quarterly option, the minimum investment amount is Rs. 1,500 per quarter for a minimum period of four quarters.
 
Manish Bandi is the fund manager of the Scheme. Bandi is a science graduate and a Chartered Accountant with 12 years of experience in the financial services industry.
 
The Scheme will be available in dividend option and growth option. Unit holders are given an option to hold the units in demat form in addition to account statement (physical form). The Scheme would invest 95%-100% in stocks comprising CNX Dividend Opportunities Index, while the rest would be invested in debt and money market instruments.
 
The entry load on the Scheme is nil. The Scheme will have an exit load of 1% for exit on or before one year from the date of allotment of units. Also, for SIP, there will be an exit load of 1% for exit on or before one year from the date of allotment of each installment.
 
The maximum annual Scheme recurring expenses including the investment management fees that can be charged to the Scheme is 1.5% of weekly average net assets. “Being a passively managed index fund, the Scheme would charge lower expenses in comparison to many actively managed mutual fund schemes which charge 1.75% to 2.5% expenses,” Mr Bandi explains. He adds, “The portfolio rebalancing for the Scheme will be done by IISL once every year in October-November after the annual results are out.”