Kotak Nifty Next 50 Index Fund: Aiming to Benefit in Passive Mode - Outside View by PersonalFN

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Kotak Nifty Next 50 Index Fund: Aiming to Benefit in Passive Mode
Feb 22, 2021

With the Indian market indices NIFTY 50 and S&P BSE Sensex hitting all-time high and recovering the losses from the market crash, most mutual funds have witnessed improvement in performance.

However, there are still many actively managed funds that have been unable to catch up with the benchmark. Therefore, Passive investing strategy is increasingly becoming popular among mutual fund investors. Passive funds are less complex and it tracks a particular benchmark to replicate the composition and generate returns.

In the last couple of years, mutual funds have launched passive funds that track various categories (equity, debt, gold), themes (ESG, global), sectors (pharma, IT), as well as other innovative products to help investors create a diversified portfolio.

Both actively managed funds and passively managed funds have pros and cons each. The major difference is that, actively managed funds make it possible to beat the benchmark and exhibit better returns while the passively managed funds will be similar to the benchmark performance.

--- Advertisement ---
No crash, correction, or pandemic can STOP This..

At last, it's happening...

Right here in India...three hidden mega-trends are converging for the first time ever to trigger an economic boom of unparalleled proportions.

A boom so powerful - no crash, no correction, and no pandemic can STOP India from becoming the next economic superpower...

And those who take advantage of this mega shift could potentially generate massive wealth for themselves and their families in the long run.

We are talking about  potential 1,000% gains...and perhaps even more over the long term.

But trust me, people who pass this opportunity will regret their decision in the years and decades to come...

So, if you want to save yourself from potential downsides of this mega shift...

...and instead, leverage on it for potential windfall gains...

Join us on 15th April at my special event...

We'll reveal the full details there.

Here's Your Free Pass to Our Special Event
------------------------------

In the wake of passive funds gaining popularity, Kotak Mutual Fund has launched Kotak Nifty Next 50 Index Fund. It is an open-ended scheme replicating/tracking Nifty Next 50 index, to achieve the investment objective to generate returns that are commensurate with the performance of the Nifty Next 50 Index.

However, there is no assurance that the objective of the scheme will be realized.

Table 1: Details of Kotak Nifty Next 50 Index Fund
Type An open ended scheme replicating/ tracking Nifty Next 50 index Category Index Fund
Investment Objective The investment objective of the scheme is to replicate the composition of the Nifty Next 50 and to generate returns that are commensurate with the performance of the NIFTY Next 50 Index, subject to tracking errors. However, there is no assurance that the objective of the scheme will be realized.
Min. Investment Rs 5,000 and in multiples of Re 1/- for purchases and Rs. 0.01 for switches. Additional Purchase Rs. 1000/- and in multiples of Rs. 1 for purchases and Re 0.01 for switches Face Value Rs 10/- per unit
SIP/STP/SWP Available
Plans
  • Direct
  • Regular
Options
  • Growth
  • Dividend
Entry Load Not Applicable Exit Load Nil
Fund Manager - Mr Devender Singhal
- Mr Satish Dondapati
Benchmark Index Nifty Next 50 Index TRI
Issue Opens: February 17, 2021 Issue Closes: February 24, 2021
(Source: Scheme Information Document)

What will be the Investment Strategy for Kotak Nifty Next 50 Index Fund?

Kotak Nifty Next 50 Index Fund will follow passive investment strategy with investments in stocks in the same proportion as in NIFTY Next 50 Index.

The investment strategy would revolve around reducing the tracking error to the least possible through rebalancing of the portfolio, taking into account the change in weights of stocks in the index as well as the incremental collections/redemptions from the Scheme.

A small portion of the net assets will be held as cash or will be invested in debt and money market instruments permitted by SEBI/RBI including TREPS or in alternative investment for the TREPS as may be provided by the RBI, to meet the liquidity requirements under the Scheme.

Revealed: 3 Stocks for Potentially Massive Gains

About the Index

The NIFTY Next 50 Index represents 50 companies from NIFTY 100 after excluding the NIFTY 50 companies. The NIFTY Next 50 Index represents about 10% of the free float market capitalization of the stocks listed on NSE as on March 29, 2019.

Below mentioned is the list of Top constituents and sector by their weightage as of now.

(Source: NSE Nifty Next 50 Index)

The scheme apart from investments in stocks in the same proportion as in NIFTY Next 50 Index, it will invest up to 5% of its assets in units of debt and money market securities to meet the liquidity requirements under this scheme.

Under normal circumstances, the asset allocation will be as under:

Table 2: Asset Allocation of Kotak Nifty Next 50 Index Fund
Instruments Indicative Allocations
(% of Net Assets)
Risk Profile
High/Medium/Low
Minimum Maximum
Equity and Equity related securities covered by the NiftyNext 50 Index* 95 100 Medium to High
Debt and Money Market Securities# 0 5 Low to Medium
*Exposure to equity derivatives of the index itself or its constituent stocks may be required in certain situations wherein equity shares are unavailable, insufficient or for rebalancing in case of corporate actions for a temporary period etc. The gross position to such derivatives will be restricted to 50% of net assets of the scheme.
#Money Market instruments includes commercial papers, commercial bills, treasury bills, Government securities having an unexpired maturity up to one year, call or notice money, certificate of deposit, usance bills, and any other like instruments as specified by the Reserve Bank of India from time to time.

(Source: Scheme Information Document)

--- Advertisement ---
[Watch Now] 3 Little-known Stocks We are Super Bullish On



Click Here to Watch Now
------------------------------

Who will manage Kotak Nifty Next 50 Index Fund?

Kotak Nifty Next 50 Index Fund will be managed by Mr Devender Singhal and Mr Satish Dondapati

Mr Devender Singhalis Fund manager at Kotak Mahindra Asset Management Company Ltd. He has over 18 years of experience in equity research and fund management and his qualifications include BA (H) Mathematics and PGDM (Finance).

Prior to joining Kotak AMC Mr Singhal was associated with the PMS divisions of Kotak, Religare, Karvy and P N Vijay Financial Services. Currently schemes managed by him are; Kotak Asset Allocator Fund, Kotak PSU Bank ETF, Kotak Debt Hybrid Fund, Kotak Nifty ETF, Kotak Banking ETF, Kotak Sensex ETF, Kotak NV 20 ETF, Kotak India Growth Fund Series 4

Mr Satish Dondapati is Fund Manager- ETF at Kotak Mahindra Asset Management Company Ltd. He has over 12years of experience in ETF and his qualification is MBA (Finance). Prior to joining Kotak AMC, he worked with Centurion Bank of Punjab in the MF product team.

Currently schemes managed by him are; Kotak Sensex ETF, Kotak PSU Bank ETF, Kotak Nifty ETF, Kotak Banking ETF, Kotak NV 20 ETF, Kotak Gold ETF.

Fund Outlook - Kotak Nifty Next 50 Index Fund

As a significant number of actively managed mutual funds have turned out be underperformers in the past couple of years, Index funds have been gaining momentum. Unlike actively managed funds, index funds do not have to limit their exposure to single stock. Thus, they can benefit immensely when there is rally in index heavyweights.

Kotak Nifty Next 50 Index Fund will invest in the Nifty Next 50 Index stocks, which is a part of NIFTY 100 after excluding the NIFTY 50 stocks. These are large-cap stocks that may provide stable returns in medium term to long-term investment horizon.

The fund's performance will depend on the market conditions and benchmark performance of Nifty Next 50 Index. The fund manager has a limited role to play, tracking the underlying index and implementing any changes in the investment portfolio. Consequently, the performance of the fund will mirror the performance of the underlying index, subject to tracking error.

It is noteworthy, that this is similar to investing in direct equity and is prone to volatility.

If you are looking to benefit from the growth potential of next 'blue-chip' stocks, you can consider investing in Kotak Nifty Next 50 stocks, after considering its suitability based on your risk appetite, investment horizon, and financial goals.

PS: At PersonalFN, we arrive at top rated funds using our SMART Score Model. If you wish to select worthy mutual fund schemes, I recommend subscribing to PersonalFN's unbiased premium research service, FundSelect.

Additionally, as a bonus, you get access to PersonalFN's popular debt mutual fund service, DebtSelect.

If you are serious about investing in a rewarding mutual fund scheme, Subscribe now!

Author: Mitali Dhoke

This article first appeared on PersonalFN here.

Join Now: PersonalFN is now on Telegram. Join FREE Today to get 'Daily Wealth Letter' and Exclusive Updates on Mutual Funds

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.

Disclaimer:

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Equitymaster requests your view! Post a comment on "Kotak Nifty Next 50 Index Fund: Aiming to Benefit in Passive Mode". Click here!

  

More Views on News

How Millennials Can Overcome the Financial Challenges (Outside View)

Apr 14, 2021

The pandemic triggered an economic downturn, and millennials experienced layoffs and pay cuts, it affected their finances and ability to build wealth.

India's QE and the Stock Market (Fast Profits Daily)

Apr 14, 2021

In this video, I'll tell you how the RBI's new quantitative easing program could affect the stock market.

Don't Write Off This Sector Yet (Profit Hunter)

Apr 14, 2021

Will apps like Netflix deal a death blow to theatres? Find out here...

Best Banking & PSU Debt Funds to Invest in 2021 (Outside View)

Apr 13, 2021

PersonalFN explains the outlook for Banking & PSU Debt funds and the best Banking & PSU Debt funds that can be considered for investment in 2021.

India: Recovery Stalled by Vaccine Games? (The Honest Truth)

Apr 13, 2021

Ajit Dayal on how India's vaccine strategy will impact the markets.

More Views on News

Most Popular

India: Recovery Stalled by Vaccine Games? (The Honest Truth)

Apr 13, 2021

Ajit Dayal on how India's vaccine strategy will impact the markets.

4 Stocks to Make Your Portfolio Immune to the Second Covid Wave (Profit Hunter)

Apr 6, 2021

Rather than predicting the market, successful investing is more about preparing well and placing your bets accordingly.

If the Market Falls, I Will Do This... (Fast Profits Daily)

Apr 1, 2021

What should you do if the market falls? In this video, I'll tell you what I will do.

The Indian Real Estate Party Has Just Begun (Profit Hunter)

Apr 1, 2021

A favourable demand supply scenario makes a strong case for real estate prices.

The Dilemma of Investing in Bharti Airtel Views On News (Views On News)

Apr 1, 2021

Rahul Shah on whether Bharti Airtel will emerge as the next big thing in the Indian stock market

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Apr 13, 2021 (Close)

MARKET STATS