NFO Alert: The country’s largest fund house SBI Mutual Fund has launched the new SBI NIFTY It Index Fund. This is an open-ended scheme that tracks or replicates Nifty IT Index. The time period of this New Fund Offer (NFO) will be from 4 February to 17 February 2025. This fund offers a great opportunity for investors willing to invest in the IT sector.
SBI Mutual Fund: Investment objective
The purpose of this scheme is to give the same returns of the total returns of the securities included in the NIFTY IT Index, but it can be Tracking Error and cannot be guaranteed to return.
SBI Mutual Fund: Where will invest?
- Investments ranging from at least 95% to 100% under the scheme will be in the stocks included in NIFTY IT Index. Investment of up to 5%
- Securities can be done in securities such as G-SECs, SDLS, Treasury Bills and other instruments.
- It also includes tripartite repo and liquid mutual fund units.
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New offer of SBI Mutual Fund: Charge on Exit in 15 days, know minimum investment details
Exit load structure
If you get out of the scheme within 15 days of allotment, you have to pay 0.25% exit. But after 15 days there will be no charge on exit.
Note, AMC has the right to convert exit load structure into future.
Minimum investment amount / switch-in details
- Investment during NFO:
- Minimum amount: ₹ 5,000
After this, you can invest more in multiple multiples of 1 rupee.
If you want to switch to another scheme of SBI Mutual Fund (after the completion of the lock-in period), the minimum amount will still be ₹ 5,000.
On Continuous Basis on continuous basis:
- Minimum amount: ₹ 5,000 and then can invest in multiple multiples.
Invest through SIP too
You can also invest through Daily, Weekly, Monthly, Quarterly, Semi-Nual and Annual SIP.
Benchmark: NIFTY IT TRI ENDEX will be performed compare
The benchmark of this scheme will be Nifty IT Tri Index. This has been selected because a large part of the scheme will invest in the same securities that are included in this index. Its composition is considered to be the best suitable for measuring the performance of this scheme.
However, the trustee will have the right to change the benchmark when they change market conditions. If another index gives the basis of better comparison, it can be implemented.
SBI MF: Investment Strategy
This scheme will follow Nifty IT Index and use “passive” or indexing approach to meet your investment target. Compared to other funds, this scheme will not try to “beat” the market nor will it take any defensive position in the event of a decline in the market or overwell.
The focus of AMC (Asset Management Company) will not be on assessing the benefits and losses of investment related to a particular stock or industry, nor will it take decisions based on economic, financial or market analysis. Adopting indexing approach means that the risk of active management will be avoided.
Where will the scheme be investment?
The main investment of this scheme will be in securities that are part of its underlineing index. However, in the event of corporate action (such as merger, re-concentration), the scheme can also invest in stocks that are not currently included in the index. This investment can be a maximum of 5% of the total assets.
If there is a possibility of any change in the index, such as adding or removing a company, the scheme will re-balance its portfolio within 7 days according to these changes.
Derivative strategy:
The scheme is allowed to take exposure in derivatives for non-hugging purposes according to regulation. However, investment in derivatives can be risky as it is leveraged instruments, which can also make the investor more profits and disadvantages.
Fund manager’s job is to identify the right opportunities and take decisions on them at the right time, but it is uncertain and not always guaranteeing profits. Risks associated with using derivatives may be different or higher than traditional investment.
Fund Manager:
The fund manager of this scheme will be Harsh Sethi, who has been associated with SBI Mutual Fund since May 2007. He manages many big passive funds like SBI Nifty ITF, SBI NIFTY Consumption ETF, SBI Nifty Private Bank ETF.