Is the market for index funds in India hotting up? Close on the heels of Franklin India Index Fund from Templeton Asset Management Company, Kothari Pioneer has filed the offer document for its index fund (s) with the Securities and Exchange Board of India.
The open-end index fund from Kothari Pioneer will offer Sensex and Nifty plans to investors. In other words, investors will have a choice of either investing in 30-stock BSE Sensex or 50-stock S&P CNX Nifty. The minimum investment in the two plans is Rs 10,000. The fund will charge an entry load of 1 per cent while exit within 30 days will attract a load of 0.5 per cent. Since the two plans of KP Index Fund will be passively managed, they will closely track their respective benchmarks and returns will mirror those from the two indices. Both the plans offer dividend, growth and dividend reinvestment options to investors. The two plans can invest up to 50 per cent of their corpus in derivatives. Index futures are now available on both Nifty and Sensex for one, two and three months.
Currently, Unit Trust of India is the only mutual fund, which offers Nifty and Sensex funds to investors. The launch of KP Index funds will take the total number of passively managed index to six and the number of funds in the Kothari Pioneer family to 24.
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