SBI Mutual Fund launches Nifty 500 Index Fund

The largest asset management fund house in the country, SBI Mutual Fund, has unveiled an open-ended scheme that replicates/ tracks the Nifty 500 Index: SBI Nifty 500 Index Fund. The new fund offer, or NFO, of the scheme, will be open for subscription from September 17 to September 24.

What is the SBI Nifty 500 Index Fund?

The fund will be benchmarked with Nifty 500 – TRI, and Viral Chhadva will manage it. Thus, according to the fund house’s press release, this fund provides an opportunity to invest in one single index, the Nifty 500 index. Its portfolio comprises the top 500 stocks by market capitalization, covering the large, mid, and small-cap segments.

It aims to give returns equivalent to the total returns of the securities represented through the underlying index, subject to tracking error.

We continue to build upon our strong franchise in the passive investment space in addition to our actively managed funds. The SBI Nifty 500 Index Fund will allow investors to invest in companies that comprise the whole Indian economy, accounting for more than 92% of the market capitalization.

Investment Strategy of SBI Nifty 500 Index Fund

The scheme should invest a minimum of 95% and a maximum of 100% of its assets in stocks of the Nifty 500 Index and up to 5% in Government securities, like G-Secs, SDLs, treasury bills, and any other similar instruments as specified by the RBI from time to time, including triparty repo and units of liquid mutual funds.

“The SBI Nifty 500 Index Fund is for those who want to invest in one fund comprising established (large caps), growing (mid-caps), and young businesses. What you get in effect is a proxy to the country’s listed universe of companies across different sectors and a multicap-based offering in one index fund,” said D P Singh, Deputy MD and Joint CEO, SBI Funds Management Limited.

Who Should Invest in This Fund?

Its minimum application amount is Rs 5,000, and thereafter, it is in multiples of Re 1. The fund also offers daily, weekly, monthly, quarterly, semi-annual, and annual SIP frequencies.
The SchSchemell tracks the Nifty 500 Index and employs a “passive” or indexing approach to achieve the investment objective.

The scheme is suitable for investors seeking longer-term capital appreciation who would like to invest in securities covered by the Nifty 500 Index.

FAQs

1. What is the SBI Nifty 500 Index Fund?
   SBI Nifty 500 Index Fund is an open-ended scheme that tracks the Nifty 500 Index. This means it provides investment exposure to 500 of India’s best stocks. NFO is open for subscription from September 17 to September 24, 2020.
2. Which index is the SBI Nifty 500 Index Fund tracking?
   It tracks the NIFTY 500 INDEX, which includes the top 500 stocks. By market capitalization across large-cap, mid-cap, and small-cap segments.
3. For Whom does the SBI Nifty 500 Index Fund work?
   It has Viral Chhadva, a professional fund manager of SBI Mutual Fund, working on the fund’s mandate.
4. What is the fund’s investment objective?
   It generates returns comparable with the overall return provided by the Nifty 500 Index and minimizes the tracking error.
5. How much investment is required to initiate the process?
   The minimum investment amount is Rs 5,000, which can be invested further in multiples of Re 1.
6. What investment style does the fund adopt?
   The fund adopts passive or indexing approach as it replicates the performance of Nifty 500 Index.
7. Who should invest in the SBI Nifty 500 Index Fund?
   The scheme suits investors looking for long-term capital appreciation and diversified exposure to large, mid, and small-cap stocks.
8. What are the SIP options available?
   It offers SIPs at daily, weekly, monthly, quarterly, semi-annual, and annual frequencies.