NFO Pick – (Kotak BSE Sensex Index Fund)

27 Jan 2025 , 06:20 AM

WHY KOTAK BSE SENSEX INDEX FUND NOW?

BSE Sensex continues to be an interesting and lucrative asset class. Here is why.

• Sensex delivered positive returns in 19 of the last 24 years. CAGR returns in these 24 years has been an impressive 16%.
• An investment of ₹1 lakh in the Sensex in year 2000 would have grown to ₹24 lakhs by December 2024.
• Large cap premium at 7% over historical average is much lower than BSE Mid-Cap at 15% premium and BSE Small Cap at 22% premium to historical averages.
• Also, BSE Sensex has experienced lower drawdowns (post-GFC crash) at just 27%. Drawdowns were 36% for BSE Mid-Cap Index and 42% for BSE Small Cap Index.

But, who should invest in the Kotak BSE Sensex Index Fund, and why?

WHO SHOULD INVEST IN KOTAK BSE SENSEX INDEX FUND AND WHY

The Kotak BSE Sensex Index Fund is best suited for long term investors who are looking at lower cost alternatives to participate in equities. It is also a good fit for new investors onboarding to equity funds; so, they get exposure to blue-chips stocks at minimal costs.

Why to invest in Kotak BSE Sensex Index Fund? It offers a diversified portfolio of 30 blue chip companies, and as past data shows, wealth creation has been strong in the long run. This is a low cost alternative to active funds; and considering the current levels of Sensex, a good way to participate would be through the SIP route.

GLANCE AT THE KOTAK BSE SENSEX INDEX FUND NFO

Here are key details of the Kotak BSE Sensex Index Fund NFO.

• The NFO opened on January 27, 2025 and closes on February 10, 2025. Regular sale and repurchase of units at NAV linked prices will start within 15 days after closure.
• On the risk-o-meter, Kotak BSE Sensex Index Fund is classified as “Very High Risk” due to its predominant equity exposure, and indexed to the fortunes of BSE Sensex.
• Investment objective of the fund is to generate long term growth, by investing in an equity portfolio that mirrors the BSE Sensex, with minimal tracking error.
• There is no entry load or exit loan; being an index fund. Also, the minimum investment in the NFO as lumpsum or SIP would be ₹100 and in multiples of ₹1 thereof.
• The Kotak BSE Sensex Index Fund will offer regular and direct plans. In terms of the options, the fund offers the growth and the IDCW plan to investors.
• Fund managers for Kotak BSE Sensex Index Fund are; Devender Singhal, Satish Dondapati, and Abhishek Bisen.
• Kotak BSE Sensex Index Fund will be treated as an equity fund for tax purposes. STCG (less than 12 months) will be taxed at 20% plus cess. LTCG (over 12 months) will be taxed at 12.5%, with ₹1.25 lakhs base exemption per financial year.

The Kotak BSE Sensex Index Fund offers a good model for long term wealth creation through a low-cost diversified portfolio. A SIP approach could deliver best results due to the added benefits of rupee cost averaging.