Benchmark Mutual Fund has launched - Benchmark S&P CNX 500 Fund, an open-end equity index fund. The fund, like any other index fund, will replicate its stated benchmark, S&P CNX 500.
The fund will have at least 90 per cent exposure in the stocks of its chosen index. In case, it is not able to buy a stock that is stated in the index, then it can have exposure in its derivatives instruments up to 10 per cent. The fund may also invest in various debt instruments like money market instruments, G-Sec, Bonds, Debentures and Cash but it should not be more than 10 per cent of the total net assets.
Investment Strategy:
An index fund it will be passively managed to replicate the Index constituents with respective weightings. The scheme will not try to beat its benchmark. Thus the fund manager’s role is restricted to only monitoring the tracking error of the scheme on an ongoing basis and minimizing this error.
Fund Manager:
Mr. Vishal Jain, 36 years, is the designated fund manager. He is B. Sc and MBA with over 10 years of experience with Index Group at CRISIL. He is also responsible for managing four other funds at Benchmark Mutual Fund.
AMC Performance:
Benchmark Mutual Fund maintains has specialized in Exchange Traded Funds (ETFs) and Index Fund categories amidst the mutual fund industry. Now, the fund house has launched first open-end index fund which will replicate S&P CNX 500 which consist 500 odd stocks from across 72 different industries. The fund house was also the first to launch Gold ETF, Mid Cap Index Fund, Liquid ETF etc. The fund house is currently managing Rs. 3904.66 crores of assets, which is not even 1 per cent of the total AUM of the industry.
Suitability & Recommendation:
Benchmark S&P CNX 500 Fund will be low cost choice for investors seeking a broad exposure of Indian equity.
This fund is likely to provide the widest equity exposure compared to any other equity fund in India. The index provides a broad diversification across sectors and industries accounting for nearly 92 per cent of the market capitalization.
Index fund also have lower recurring cost. Index fund can have a maximum expense ratio of 1.5% compared to 2.25% for actively managed fund.
The case for Indexing is getting stronger. In the current market meltdown many funds have collapsed far more than their benchmark, for lack of disciplined investment approach. Besides, the growing universe of Indian equity funds makes fund selection a challenging exercise.
Basic Details:
NFO Opens: November 17, 2008
NFO Closes: December 15, 2008
Options: Growth and Dividend (Payout and Re-investment)
Entry Load: Nil
Exit Load: For Investment below Rs2 crore
• 1.50 per cent, if redeemed before one year of the allotment of the units.
• 1 per cent, if redeemed after one year but within two years of the allotment of the units.
• 0.50 per cent, if redeemed after two years but within three years of the allotment of the scheme
• Nil, for redemption after three years of the allotment of the units.
For Investment above Rs2 crore;
• 0.50 per cent, if redeemed within three months of the allotment of the units.
• Nil, for redemption after three months of the allotment of the units.
Fund Manager: Vishal Jain
Benchmark: S&P CNX 500
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