Zerodha Mutual Fund introduces new open-ended scheme: How it works
Zerodha Mutual Fund has unveiled the Zerodha Nifty LargeMidcap 250 Index Fund, an open-ended plan designed to mirror and follow the Nifty's LargeMidcap 250 Index. It is open for public subscription from October 20 to November 3, 2023. This investment option targets those seeking long-term capital growth through equity and equity-related securities within the Nifty LargeMidcap 250 Index.
Investment objective and asset allocation
The goal of Zerodha Nifty LargeMidcap 250 Index Fund is to invest in shares that make up the Nifty LargeMidcap 250 Index, maintaining the same proportion as the index itself. This approach aims to achieve returns equal to the Total Return Index of the Nifty LargeMidcap 250 Index, considering tracking error. Typically, the scheme's portfolio will allocate 95-100% to equities and equity-related securities within the Nifty LargeMidcap 250 Index, carrying a very high-risk profile, and 0-5% to low-to-moderate risk instruments.
Comparing with similar funds and benchmarking
So far, only Edelweiss Mutual Fund has introduced a comparable index fund scheme - the Edelweiss Nifty Large MidCap 250 Index Fund. It has generated a one-year return of 19.74%. The Zerodha Nifty LargeMidcap 250 Index Fund's performance will be benchmarked against the Nifty LargeMidcap 250 Index TRI. The scheme aims to maintain a low tracking error by replicating the portfolio in line with the index.
Scheme management and risk profile
Kedarnath Mirajkar has been named as the designated fund manager for the Zerodha Nifty LargeMidcap 250 Index Fund. With no entry or exit loads, this scheme offers easy access for investors without any extra fees. However, according to the Scheme Information Document, the scheme carries a "Very High Risk" profile. Investors are urged to consult their financial advisors to determine if this investment product aligns with their risk tolerance and financial objectives.
